Close Close

Financial Planning > Tax Planning

How Advisors Can Deal With Client Cultural Differences

Your article was successfully shared with the contacts you provided.

As a preview to my feature story for the February 2012 issue of Investment Advisor on how advisors can learn to speak their clients’ languages, here are what some of your peers have to say about global investing, taxes, divorce and more. As a follow-on, I’ve included suggestions on how to deal with these differences from my perspective as a psychotherapist and money coach.

Global Investing

“Canada is more of a melting pot; they are more culturally tolerant of differences. Canadians travel all over the world without hesitation. In the U.S., only about a quarter of Americans own a passport; in Canada, it’s well over 60 percent. The Canadian investor will be more of a global investor. Americans tend to have a local bias.”

Robert Keats, CFP, president of Keats, Connelly & Associates in Phoenix and author of “The Border Guie,” a guide to living, working and investing across the border for Canadians and Americans living in Canada

If you normally focus on U.S.-centric investments, building a reputation for a more global perspective may help you attract clients from other cultures, including but certainly not limited to Canada.–Olivia

Marriage and Divorce

“In our culture, marriages are viewed in the same perspective as other relationships such as paternal or maternal–i.e., once in a lifetime. It is assumed that people need to adjust and make it work. Ending the relationship isn’t often seen as a solution, while Western societies tend to be more open to that choice.”

Devang Shah, CFP, a financial planner with Right Returns Financial Planning in Mumbai, India

No doubt you’ve worked with many American clients whose planning process has been dramatically affected by the trauma and ugly repercussions of divorce. Advising Indian clients who are in stable but difficult marriages can present different challenges, such as getting both spouses on board to make decisions. However, our culture’s use of money as “war reparation payments” probably won’t happen in an unhappy marriage between Indians.–Olivia (left)

Life Insurance

“The real frustrating part [of working with Hispanic clients] is that it’s a more passive kind of culture. They don’t like conflict, so they won’t share with you a lot of what’s on their mind. For example, a husband and wife, two kids, you know they need life insurance. You’re there telling them they need a $600,000 policy. [These are] middle or lower middle class clients, probably in their mid- or late 30s. When you talk about life insurance, he’s thinking about ‘el sancho–the guy who will take over my family when I’m gone.’ They’ll focus on the cost [without mentioning el sancho]. But if I bring up el sancho–‘You’re afraid el sancho’s gonna end up with the money!’–then we can laugh and have a real discussion about it. When I say, ‘And I can create a trust for you to avoid el sancho getting the money’; then 100% of the time, we can get them in life insurance.”

Louis Barajas, CFP, owner of Louis Barajas Wealth Planning, Santa Fe Springs, Calif.  

Barajas’ comment reminds me that it’s risky for an advisor who comes from outside the client culture to claim intimacy with it. In this case, it would be a bad idea for a non-Hispanic advisor to affect familiarity with the culture by tossing around terms like “el sancho.” Instead, you might talk to clients’ fears by saying something like “I imagine you might be concerned about leaving money to help your wife and kids. I can help you make sure that your money goes to them alone.” This may win you a loyal client who appreciates that you’ve got his back.–Olivia

Tax Planning

“The overlying issue [with wealthy Mexican clients] is that they have a big blind spot about taxes. For example, Mexico doesn’t have an estate tax, so Mexican clients are very surprised when I bring up planning for estate taxes. Also, Mexico, like most countries in the world, taxes residents [the same] regardless of where they come from. In the U.S., tax [varies] based on citizenship and residence status, which most Mexicans aren’t aware of. Resident aliens don’t have an unlimited marital deduction, while American citizens do.

“Also, resident aliens have limits to how much they can give to one another, unlike in Mexico. Let’s say there’s a wealthy couple who are U.S. residents. They have everything in the husband’s name, but then they buy a condo worth $750,000 and put it in their joint names. That may create a tax issue for them, because it’s considered a gift to her.

“Another issue is that in Mexico, there’s no tax on gifts to descendants or ascendants. So if I can talk to Mexicans before they become U.S. residents, we can help them transfer assets as gifts to their children before they come here and lower their taxes tremendously.”

Raoul Rodriguez Walters, CFP, president of Mexico Advisor, Portland, Ore.

When you educate yourself on tax law differences and their implications, you will be able to not only advise and inform your clients more knowledgeably, but also help persuade them that you have their best interests at heart.–Olivia

“Canadians like to pay down their debt, and paying off the mortgage is ‘the thing to do.’ There are very few tax-free bonds or tax-deferred annuities in Canada. That’s why it’s better for them to pay down their mortgages. When they come to the U.S., because mortgages are tax-deductible in the States, they want to have one to be able to deduct it.

“They love the lower tax rate here. There are many opportunities in the U.S. for different kinds of tax-free or tax-deferred investments, so they can live off their investment portfolio with a higher level of after-tax income.

“The big thing for an American financial planner who’s dealing with a Canadian client in the U.S. is to understand differences on the tax side. Investments are very similar, but you need to know Canadian retirement plans. Every Canadian has the equivalent of an IRA called a Registered Retirement Savings Plan. When a Canadian client moves to the States, advisors need to understand what to do with these plans, and do things correctly and in the right order, or they’ll create both Canadian and American tax problems.”

Robert Keats (above), CFP, president of Keats, Connelly & Associates, Phoenix  

If you’re not familiar with important issues that typically affect clients from a different culture, you might consider hiring an expert to consult with and coach you. As Robert Keats says, doing things just right and in the right order will help avoid problems for your client and make you look like an ace.–Olivia 

Property & Casualty insurance

“Mexico is not a litigious society, so liability issues aren’t important [there]. But in the States, anyone who can sue you can wipe you out. So homeowners and auto insurance in Mexico don’t have a huge liability component, whereas in the States, they do. When people move to the States, we have to help them see why they need good liability coverage in their homeowners and auto insurance, and we may recommend an umbrella policy to provide excess liability coverage. Usually it’s not hard to convince them of the need, but they come here unaware of it.”

Raoul Rodriguez Walters, CFP, president of Mexico Advisor, Portland, Ore.

This is an excellent example of the value an advisor can add by taking the time to educate clients about unfamiliar risks in their new land.–Olivia

Willingness to Save and Invest

“My 80-year-old neighbor from China sums it up like this: Asians view deposits/cash as investments in a secure future and debt/liabilities as being wasteful expenditures.”

Rita Cheng, CFP, financial advisor with Ameriprise Financial Services in Bethesda, Md. 

“Canadians look at the U.S. as their big brother. It’s a love-hate relationship; we have the longest unprotected border in the world.

“Canadians are much better savers than Americans; they’ve been saving at a higher rate forever. Right now, they’re investing their money in U.S. real estate. Realtors say, ‘Thirty to 50 percent of my buyers are Canadian, and they all pay cash!’ We have [Canadian] clients we do tax work for who have bought a hundred homes here [in the U.S.] and paid cash for them all. They’ve helped save the real estate markets in Arizona and Florida.

“In a recent newspaper article, I saw that one out of five Canadians is either buying property in the U.S. or thinking about buying property in the U.S. They have more confidence in the U.S. economy than U.S. citizens do.”

Robert Keats, CFP, president of Keats, Connelly & Associates, Phoenix, Ariz. (who has dual U.S./Canadian citizenship)

Remember, what seems to be an imbalance in the way clients manage their finances may make perfect sense in the environment they came from. —Olivia 

Self vs. the Family

“It is more accepted in Western culture that each person must look after oneself. Indian culture tends to revolve around the family, around the obvious dependencies of young or even adolescent children on parents and of parents on their adult children.”

Devang Shah, CFP, a financial planner with Right Returns Financial Planning in Mumbai, India

Be mindful of this norm when advising clients from cultures where family members tend to support each other financially throughout life. Try not to come across as judgmental or lacking empathy. On the contrary, you will need to help them learn about taking care of themselves without expecting them to abandon the cherished value of “family first.” In many cases, compromise may be necessary in working with clients who have this outlook. –Olivia


“What I find fascinating about the U.S. is that once you’re there, many [people] are Americans first and something else second. For example, in America someone from Italy becomes an Italian-American, but American first, and is more likely to wave the American flag. I’m jealous of that because I think it’s a wonderful attribute. My son-in-law is Canadian-born, but from an Italian family. His parents came to Canada when they were very young. And he considers himself Italian.”

Naguib Kerba, CFP, financial planner and branch manager at Investment Planning Counsel in Mississauga, Ontario

Before taking on a client from a background different from your own, figure out whether this person is highly assimilated into American culture, or still espouses the values and behaviors of their national or ethnic heritage. Your client connection will be strengthened if you make this a priority early in the relationship. Practice curiosity and acceptance–an especially valuable attitude when trying to ensure that a client who speaks a different language will feel understood and respected. –Olivia

See Olivia Mellan’s latest feature story from the January issue of Investment Advisor, on what advisors should do to help their clients who find themselves on the dark side of retirement.


© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.