The Global Planner

Here’s a startling statistic: By the end of this year, the number of non-U.S. CFP certificants will likely surpass the number of U.S. certificants. It’s the clearest signal yet that the financial planning profession is truly becoming globalized.

Many of us in financial planning and investing have used the word “globalization” for a while. It’s a popular business buzzword, and we use it in reference to economic growth in China, increased trade with Latin America and other similar developments. A good financial advisor today incorporates global investments into his or her client’s asset allocation.

When I began research for this column about globalization, I thought that I would be writing about international investments, asset allocation and exchange rates. That’s the type of globalization that matters to a financial planner, right?

Well, I did find that advisors are interested in international investments. It’s fair to say that international asset allocation for clients has become fairly standard practice.

However, I found that globalization means much, much more to our profession. My key take-away from interviews with industry experts and my surveys of financial advisors is this: While there is no consensus on what we mean when we say “the globalization of financial planning,” it is coming, and it will have a big effect on our profession.

It will take several columns to share all that I’ve learned about globalization. So let’s begin.

First, globalization surely is about making smart international investments for clients. This is a tremendous challenge for even the most sophisticated investment manager.

Second, globalization is about commerce. Some Americans express concern about the impact of global trade on U.S. jobs and economic growth, but it’s hard to imagine that the increase in international commerce will be reversed.

Next, globalization has a very specific meaning in the context of delivering personal financial services. Nobody knows how many adult Americans are living abroad, but it’s a big number: More than 6 million Americans living abroad were eligible to vote in the 2006 elections. For the first time ever, the 2010 U.S. Census will try to tally the number of Americans living abroad (a population segment that, potentially, is an important source of clients for financial advisors).

Of course, non-U.S. citizens flock to this country in even greater numbers than Americans who choose to live abroad. America remains the land of opportunity for most immigrants, while many retiring Americans find lifestyle and cost-of-living advantages living abroad. Maybe you have a client who’s a retired Indianapolis executive who lives half a year in Costa Rica. Or perhaps you have a computer programmer client who has financial ties with his extended family in India. Could be you have a U.S. client on work assignment, living in Nigeria for three years, who needs financial advice now and when he returns to Dallas.

Cross-Border ThinkingWith the U.S. dollar at historically low levels, people from around the world are investing in U.S. assets at what they see as bargain prices. Just ask any real estate agent in Miami or commercial property broker in New York City or Los Angeles. And these purchasers — some of them bringing considerable assets into this country — are potential new financial planning clients, with complex cross-border planning issues in tow.

Laura Brook, director of international relations for the Financial Planning Association (FPA), put it this way: “Your due diligence with new clients should include this question: ‘Are both of you U.S. citizens?’ If the answer is ‘No,’ you need to make sure you know how to handle cross-border planning issues.”