Advising International Clients; Looking Beyond Wirehouses: February Research—Slideshow

Research’s February issue examines how to tap the growth business of cross-border clients, plus overcoming anxieties about leaving a big firm

Serving internationally mobile clients has become a growth industry for financial advisors, as Contributing Editor Ellen Uzelac discusses in Research magazine's February cover story "Advising Across Borders." Potential clients include an estimated 6.32 million Americans (excluding military and government employees) living in 160-plus countries.

Spending extended time abroad means stepped-up financial complexity, including exposure to currency risk and multiple tax systems. A key to success, Uzelac writes, is “know before you go”; pre-planning can be crucial to avoid getting tripped up on matters ranging from work permits to entitlement eligibility.

Another February article, “Fear of Flying,” tells the stories of brokers who left the wirehouse world in order to become registered investment advisors. A major obstacle they had to overcome: anxiety about the unknown, including regulatory compliance and the costs of doing business. The rewards for takign the RIA path can be substantial, however, including an enhanced sense of freedom.

Click through the following slides to preview the February issue of Research.

Advising Across Borders

The February cover story by Ellen Uzelac looks at the challenges and opportunities involved in providing financial advice to clients who are living for a time in foreign countries.

“Cross-border planning is a lot more complicated than people think. Most advisors underestimate it. You’ve got to know where the minefields are,” says Robert Keats, founder of Keats, Connelly & Associates, a cross-border financial planning firm in Phoenix, Ariz.

Writes Uzelac: “The bigger the assets and earnings, the more important it is for the internationally mobile client to plan ahead. Taxes, insurance, estate planning and investments are all treated differently, depending upon the country. Slip-ups — spending so many days in a country that you become a resident for tax purposes, for example, or failing to disclose foreign holdings — can undermine even the best laid financial plans.”

A sidebar, “One Former Expat’s Story,” describes what Jeff Born, an academic with a Ph.D. in finance, discovered about dealing with taxes, work permits, currency risk and more during a few years in Fiji working at University of the South Pacific as inaugural dean of its business and economics program.

 Fear of Flying

Contributing Edtor Jane Wollman Rusoff analyzes the anxieties that arise from leaving the wirehouse world to become a registered investment advisor. She spotlights the stories of two advisors, Amos Stavinsky and Francis Hoey, who made  the leap.

Stavinsky discusses how he came to find life at a big firm too confining. “In a wirehouse, you operate in a very confined environment,” he says. “It’s almost like working for McDonald’s: You can buy the hamburger only from McDonald’s, the buns only from McDonald’s, the fries only from McDonald’s. As long as you buy everything from McDonald’s, everything is fine.”

For Hoey, concerns about becoming his own chief compliance officer were an obstacle that had to be overcome. “Growing up in the broker-dealer world,” he says, “they’d tell you that the SEC or FINRA are coming to your door every day to shut you down. They have a very fear-oriented culture, which makes you believe it’s too hard to go out on your own.”

The article looks at how these former wirehouse brokers do business today, including managing their own costs. “I cannot emphasize this more,” Stavinsky says. “Yes, with an RIA, you make 100 percent of the fees — and a lot more than before. But running a business — salaries, health care and so on, are expensive.”

To Stavinsky, it's worth it: “For the first time in my career, when walk into the office, I’m smiling. I’m very happy. It’s freedom. It’s almost like shackles coming off your hands and legs. The sky’s the limit!”

The Gompertz Law of Mortality

In the latest adaptation from his book The 7 Most Important Equations for Your Retirement, Prof. Moshe Milevsky details how Benjamin Gompertz (1779-1865) developed a mathematical method that remains relevant to retirement income planning today, particularly on the crucial question of how long one is likely to be alive to need the money.

Previous researchers had spent much time compiling death statistics. Gompertz discerned an underlying pattern, whereby the probability of a person's dying in the coming year increases with considerable regularity from adulthood into old age.

Writes Milevsky: “While most academics toil in obscurity, and their names eventually perish despite their frenetic publishing, Benjamin Gompertz has joined a very small distinctive group of scholars with an actual equation named after him. The equation has been admired and used by researchers in demographic studies, the world over, for almost two centuries now.”

Financial Blogosphere Must-Reads

Writer Gerald Burstyn looks at the vibrant world of financial and economic blogs. Such websites form a growing universe of information, analysis and opinion, and bloggers such as Joshua Brown, Barry Ritholtz and Megan McArdle now rank high on many advisors' reading lists.

“If you work as an advisor and want to be informed about what’s going on, I think you have to be crazy not to be reading blogs in addition to The Wall Street Journal and The New York Times every day,” says Mick Weinstein, financial blogging pioneer and former editor of Seeking Alpha.

For some bloggers, the great attraction is being able to write without inhibition. Says Brown, whose site The Reformed Broker is one of the most popular financial blogs: “I know people at Merrill Lynch who say ‘I wish I could say that.’ [But] they can’t say anything. They’ve got duct tape over their mouths.”

 Unconventional Methods

Clint Watts is a consultant and blogger who seeks out non-traditional sources of information on matters ranging from national security to investment strategy. “Basically, I look for outliers,” says Watts. “I’m not looking for the eight or 10 people who all give the same answer. I’m interested in the person who has made some other choice. Alternatives and new concepts are what I’m after.”

A security expert with experience in the Army and the FBI, Watts runs the influential website SelectedWisdom.com. He started the site after concluding that mainstream media had a very limited comprehension of counterterrorism.

Watts is currently working with the Retirement Income Industry Assocation on an anonymous survey aimed at identifying unconventional opinion that could have an impact in the retirement planning field. He also continues to advise the Defense Department and law enforcement agencies on counterterrorism and related matters.

The Warren Effect

Will Elizabeth Warren win a Senate seat in Massachusetts and what if she does? Those questions are the focus of Senior Editor Kenneth Silber's February "Political Monitor" column.

Warren, a Democrat running for the seat now held by Republican Sen. Scott Brown, has become well-known as a forceful critic of Wall Street and is already being touted as a possible presidential contender in 2016.

Silber traces Warren's career, which has included being a Harvard law professor focused on bankruptcy issues, a popular author on personal finance and a federal official involved in overseeing TARP and setting up the Consumer Protection Financial Bureau.

Assessing Warren's political prospects, Silber argues that she should be considered the favorite in the Senate race in liberal Massachusetts. As for being elected president in 2016, Silber notes that "this would require a Sen. Warren to win over swing voters while keeping her base enthused, and to thrive on public dislike for Big Finance while keeping sufficient Wall Street support for the Democratic Party." Such a scenario is "improbable," he concludes.

Facing the Storm

"Closing Bell" columnist Bill Miller notes that work as a financial advisor, and life in general, can be overshadowed by personal crises of various types.

"While the economy and world events can sometimes seem like a dark storm, there’s another storm out there that many of you are working through, that most of us will never know about," he writes. "This storm takes many different shapes and can vary its intensity without warning. It’s your very own personal storm."

Miller expresses admiration for people in his life who have confronted illnesses and other problems with perseverance and dignity. He writes: "Every day there are people all around us that are dealing with their own storms. They will never tell you, but if you look closely you might be able to see. You don’t have to embarrass them by screaming out, 'I know there’s something wrong! What is it?' Maybe, instead, you simply show an ounce of compassion, some empathy and then get back to work."

To access the February issue, click here.

Page 1 of 8
Single page view Reprints Discuss this story
This is where the comments go.