When a client gives up Canadian residency to work or retire in another country like the United States, what’s a financial advisor to do?
One approach for those clients who become restricted from buying and selling investments in Canada because of their new residency is to refer the business to another Canadian firm that specializes in cross-border services. But that’s not the only solution. Some advisors have found ways to maintain strong relationships with ex-pat clients by collaborating with firms outside Canada or emphasizing financial planning over investments.
The traditional way to handle clients who emigrate to another country is to connect them with one of the small number of advisors in Canada who can continue to provide services in both countries.
Terry Ritchie, director of cross-border wealth services at Cardinal Point Capital Management Inc. in Calgary, is one of those advisors. He’s licensed and registered to manage money both in Canada and the U.S. and he’s an enrolled agent with the Internal Revenue Service.
“I tell most prospective clients [moving from Canada to the U.S.] that we can effectively do everything except the legal requirements,” he says. “Those typically come in two areas: immigration and estate planning. [In those areas,] we have a short list of professionals who we work with who are cross-border savvy. We can refer them to those folks or we can work with their existing relationships to make sure that the things that are required in those areas are done properly.”
Introducing clients to a firm such as Cardinal Point ensures they get expert, one-stop-shop service. However, it also generally spells the end of any relationship with the referring advisor and, according to Rona Birenbaum, certified financial planner and founder of Toronto-based fee-for-service financial planning firm Caring for Clients, it’s not always necessary.
Instead, Ms. Birenbaum has built an informal partnership with Randy Schneider, a wealth advisor at Creekside Financial Advisors LLC outside of Cleveland so that she could continue to serve clients who move to the U.S. And if demand becomes strong enough, she would be open to doing the same in other countries.
About 10 years ago, one of her clients was spending the winter in the U.S. and had heard glowing reviews of Mr. Schneider from friends. She then told Ms. Birenbaum about him. Intrigued, she reached out to him.
“I discovered a kind of ‘mini-me’ in the States in terms of the style of the business, the objectivity of the advice, the holistic nature of the service,” she recalls.
Not long after that, one of her clients got a job transfer to California. “I immediately called Randy,” Ms. Birenbaum says.
The two of them worked out an arrangement in which Ms. Birenbaum handles the client’s registered retirement savings plan while Mr. Schneider takes care of non-registered investing.
“We collaborate on this client’s ongoing planning because it’s unclear as to whether he will stay in the U.S. permanently or return to Canada,” she says.
In the ensuing years, Ms. Birenbaum and Mr. Schneider have teamed up for clients moving from Canada to the U.S. and from the U.S. to Canada. Technology has been a big enabler, allowing them to host web-based meetings that include both of them, the client and sometimes an accountant either in Canada or the U.S.
When a client moves to a U.S. state for which Mr. Schneider doesn’t yet have a licence, he has proven very willing to get that licence. Meanwhile, Ms. Birenbaum feels the collaboration has been a wonderful way to deepen her own knowledge.
“You always want to speak with your compliance department before establishing any informal arrangements, making sure all the appropriate disclosures are there,” she says. “But if [clients] want to maintain the relationship with you, there is a way you can do that.”
Jason Heath, managing director at Objective Financial Partners Inc. in Markham, Ont., is able to continue serving clients who leave Canada largely because of the way he has structured his practice. Rather than selling investments, he sells financial planning advice for a fee.
“That means we’re in a much different situation than most advisors who get paid to manage assets and who may not be able to help a client as holistically if they can’t continue to hold their investments once they move abroad,” he says. “So, we’re more able to work with ex-pats than a lot of rank-and-file financial advisors.”
Although Mr. Heath has had to bid farewell to certain clients who broke all ties with Canada, he finds that most Canadian citizens keep some connection to home.
“I can think of a client right now who has investments and rental real estate in Canada, and they’re living and working in the U.S. We co-ordinate some of the Canadian tax and financial planning in conjunction with a U.S. accountant and a U.S. investment advisor,” he says.
Mr. Heath also serves clients who are currently working internationally but are planning to retire in Canada.
“They may or may not be looking to manage their investments in Canada. They may or may not be looking to have a Canadian advisor at all. But they’re looking for someone who can advise them on retirement in Canada,” he says.
At the same time, Mr. Heath is currently advising a doctor in Canada who plans to retire in Guatemala.
“We’ve modelled out a long-term financial plan that shows them here’s how much you would need to save in Canada before you could break ties with Canada, move to Guatemala, get a home in Guatemala, cover retirement there. It’s hard to find somebody to give that sort of advice when most advisors are in the business of selling investments,” Mr. Heath says.
Whether an advisor develops an ongoing collaborative relationship with an advisor in another country or works on an ad-hoc basis with various experts outside Canada, Peter Merrick, income and capital enhancement consultant at TheIceSolution.com in Toronto, says it’s critical to choose international partners with care.
“You have got to be very selective,” he says. “It’s key to know they’re competent, they’re committed to excellence and to make sure they care about you and the relationship – that they don’t want to do anything that’s going to hurt your relationship with the person that you brought to them.”