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Expat Friendly Brokers

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What are Expat Friendly Brokerages?

Which online brokers are expat friendly? Many investors believe they can keep using their brokerage accounts when they move abroad and this often isn't the case due to regulatory, insurance and tax purposes, especially if you have an account in the USA and have now moved overseas. FACTA has made it very difficult for Americans living abroad to keep open their online brokerage accounts, so who are the expat friendly brokerage accounts?

We will look into who are the expat friendly brokers worldwide and look into the best way for expats to invest in secruities when living abroad. What are the best investment options and brokerage options for expats living abroad?

Let's start with the American expats as FACTA has changed the rules with regards for compliance for finanical instituions in the USA. Then we will look how GDPR has affected investment accounts in the UK & the Europe Union.

Why Are US Brokerages Closing Accounts for US Expats Living Overseas?

The Foreign Account Tax Compliance Act (FATCA) came into effect in 2014 and it had an immediate effect, costing some companies millions of dollars. Companies had to make major overhauls of their internal systems, control frameworks, processes and procedures in order to comply with the FATCA regulations before their effective date of July 1st, 2014.

FATCA imposes significant new compliance burdens on non-US financial institutions with American clients.  As a result, many non-US financial institutions now simply refuse to service Americans living overseas and many US financial institutions followed suit due to FATCA and other considerations. You can read a summary of US tax reporting for FATCA here. 

Brokerage Accounts for US Citizens Livng Abroad

Brokerage accounts for US expats are being closed down, refused to be opened & refused to be serviced by many U.S.-based financial institutions thanks to the new FATCA rules. Also, as an American living abroad, you can no longer purchase American mutual funds, you can only purchase direct securities such as Exchange Traded Fund (ETFs).

Unfriendly Expat Brokerage Accounts

We've heard that Fidelity, Morgan Stanley, Merrill Lynch, TDAmeritrade, Wells Fargo and UBS, amongst others have all either told clients to close their brokerage accounts or stopped accepting US expats as clients or won't allow them access to the accounts from abroad. Fidelity & Vanguard have had to ban Americans from investing in mutual funds. FACTA has suddenly turned all these brokers unfriendly to expats.

So, where are the expat friendly brokerage accounts? Which brokerage accounts are still friendly towards U.S. expats abroad?

Not many, we have heard Charles Schwabbstill serve US expats and Interactive Brokers still service U.S. expats living abroad. 

How to Close or Transfer Your Brokerage Account

The SEC has some specific guidance for closing a Brokerage Account and transferring funds between brokers. If you want to set up an expat brokerage account via Interactive Brokers or Charles Schwab, you can contact them directly. Often, you will need to 

Best Brokerage Accounts for British Expats 

What online brokerage account options are there for British expats living abroad? There are many options, but for self-trading, we recommend these four:

  • Interactive Brokers
  • Saxobank
  • Internaxx
  • Swissquote

Each offer something slightly different, so it will depend what types of financial instruments you want to trade and which customer service options and IT platform suits you best.

Interactive Brokers have won numerous awards as online brokers.

If you want a managed account, The Money Pouch can manage your existing Interactive Brokers account or set up a new Interactive Brokers account for expats and trade on behalf of clients with algorithmic trading.

The Money Pouch buys & sells ETFs automatically on behalf of clients. You can see the latest performance here.

The Money Pouch often uses low cost Vanguard ETFs to keep costs down for its clients.

If you want a managed account, The Money Pouch can offer a conservative, balanced or adventurous strategy based on your risk tolerance. It will automatically trade ETFs on your behalf. You can read more about the investment methdology here. 

Expat Investing

Apart from onlne brokerages, what are other methods for expat investing abroad?

You can invest via the large insurance companies who can create "investment wrappers", such as:

  • Old Mutual International
  • Royal London 360
  • Friends Provident International
  • Generali International
  • Zurich International

These wrappers can sometimes offer tax efficient structures and often, they can act as a blank canvas where you can invest in many mutual funds, structured products and ETFs. However, often the fees for investing can be much higher than brokerages, there can be high exit penalties if you cash in early and switching funds can sometimes take days.

However, there is no, "one fits all" solution. Some investors will want to trade for themselves, others will pay extra for the tax-efficient wrappers held in the Isle of Man and many will want to get on with their lives without watching boring stock charts and news all day every day.

For this last group, you can invest in a roboadviser. A roboadviser will trade automatically on behalf of a client and set-up an investment portfolio with asset diversification to protect a client's monies.

You can learn more here: What is a Roboadvser?

Set Up an Expat Friendly Brokerage Account in 10 Minutes

Please note, The Money Pouch does not accept US residents. Other expats can set up a brokerage account below.

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