Cross Border Investment Management for Canadians, Americans, and Expats

Written by Tiffany Woodfield, CRPC®, CIM® Dual-Licensed Financial Advisor
Reading Time: 4 minutes 42 seconds.

Cross-Border Wealth Planning

Protecting your wealth and having strong cross-border investment management is so important when you plan to move across the border or have ties to both the US and Canada. 

You have worked hard, followed opportunities and not always taken the easy road. Now, you've accumulated wealth in the US and Canada. Investing the time to find a team who can help you with cross-border wealth planning and investment management to protect your legacy is essential. 

The Complexities of Cross-Border Estate and Tax Planning

You want to do your part, pay your taxes, file accordingly and be onside with the IRS and the CRA. But you also likely want to avoid losing money caused by tax pitfalls you could have avoided or penalties that tie up capital. When dealing with cross-border estate or tax planning complexities, there is an increased risk of costly mistakes if it is not done correctly. 

Taking Care of Your Family and Your Legacy

As you make your day-to-day financial decisions, you're often thinking about your lifestyle now and during your lifetime. But at some point, you will need to start thinking about how you won't be here forever. You might begin to think about how you can protect your family and the legacy you worked so hard to create. 

It is essential to plan your estate well in advance, so it is simple and easy for your loved ones to follow your wishes when you are no longer here to tell them what to do. Even beyond that, you likely care about making sure everyone in your life is taken care of. By taking the necessary steps now, you can save your family many headaches and stress in the future.

Planning Your Finances to Support Your International Lifestyle

You might be thinking that financial planning should be easy and straightforward, but as you do some research, the more you find out, the more you realize you don't know. 

It seems that every time you research something new, you discover another pitfall. When you have investments and assets on both sides of the border, finding information about financial planning and investment management is tricky. But it doesn't have to be. When you know the right questions to ask and have a guide to help you manage your wealth, you can focus on your next adventure rather than wading through paperwork.

The Most Common Cross-Border Questions We Hear

At SWAN Wealth, we've helped many of our clients manage a cross-border move. We speak to people nearly every day about their cross-border struggles.

Some of the most common questions we get are as follows:

• How do I avoid getting double-taxed in Canada and the US?
• Can I keep my 401(k) when I live in Canada?
• As a Canadian resident, I still have multiple 401(k)s from my career in the US. What are my options?
• What should I do -- I got a letter saying my advisor can no longer help me as a non-resident of the US?
• Can I contribute to my IRA when in Canada?
• Do I need to convert all my investments into Canadian currency?
• What planning do I need to do before I move across the border?
• How can I invest on both sides of the border?

We've answered all those questions on our website, but you may face more complex issues. Or you may want to get the ball rolling and speak with an advisor in person right away.

If you plan a move across the border, doing a pre-move consultation ahead of time is helpful. The sooner you can speak with someone and start the process, the better. When you're in the middle of a move or looking at real estate, it's nice to know that you've already got your financial ducks in a row.

Put Together Your Cross-Border Team

We recommend you put together your cross-border team as soon as you've decided to make a move. Your cross-border team should include a cross-border accountant and lawyer as well as a cross-border financial advisor and wealth management firm.

To avoid getting double-taxed in Canada and the US, work with a team specializing in helping clients in cross-border situations similar to yours. 

Your cross-border accountant will understand how all the foreign tax credits work to limit double taxation. At the same time, your cross-border financial advisor can help you manage your assets so you don't have additional tax filings. Your cross-border financial advisor can also manage your IRAs and RRSPs, whether you live in Canada or the US. 

A cross-border lawyer will help you understand where you need a will to protect your assets and which trusts may be suitable in your situation.

The Problem with Dividing Your Portfolio Between two Wealth Management Firms

If your goal is to relax, knowing your assets are taken care of, then having two advisors and two separate portfolios is not ideal. We recommend you take the time to find the right fit in the beginning and to go with one advisory team. Keep in mind that as long as you aren't locked into investments (which you shouldn't be), you can easily move to another firm without penalties if you choose to do so in the future. 

But let's talk about why having two separate teams can be problematic.  

To understand this better, imagine two different advisory firms. One is on your right hand, and one is on your left hand. When they aren't working together, they are both limited. Things can (and often do) get dropped. Imagine trying to win a football game with one hand tied behind your back. There are similarities.

One major downside to having your investment portfolio managed by two independent firms is that you may not be positioned properly if the market turns—as it often does. This lack of a cohesive strategy can lead to overexposure and increased risk. It may also cause stress when you need to get financial advice—who do you call first when you need to discuss your financial plan?

Essentially, when you have two separate teams and advisors managing your portfolio, neither firm will be able to meet your needs effectively. Moreover, changes will take longer to implement. When someone knows your entire financial picture, they can offer solutions to help you navigate the many challenges that arise when planning your future.  

What You Should Look for When Choosing Your Cross-Border Team

When deciding who to work with for a cross-border team, be sure to look at qualifications and fit. Having a portfolio manager means they have a fiduciary duty to put your needs above their own. A portfolio manager meets with investment analysts regularly to understand market conditions and global developments. They also have the qualifications to manage a mutual fund's assets or manage investments for corporate and institutional investors. 

Having someone with this experience level is beneficial because they use their knowledge to choose the individual companies and holdings for your portfolio. Working with an advisor who isn’t limited to buying mutual funds is definitely beneficial when you are a US person living in Canada. That's because Canadian mutual funds are considered a passive foreign investment company (PFIC) and carry additional tax filing and costs. In contrast, individual stocks are not considered PFICs.

Your Time Matters

The most important thing to consider is that cross-border financial planning, wealth management, and investment management are about more than just money. It's about time. You can't go back in time to build up your assets again. That's why it's so essential that your assets are well managed, and you're not being exposed to excessive risk or taking a surprise tax hit.

You likely also don't want to waste time in a state of confusion or because you made a decision that wasn't in your best interest from a cross-border perspective. Putting together the right cross-border team is your best investment when planning a cross-border move. Doing so will save you time in both the short and long term.

Summary of Key Points:

• Ensure you understand the common questions other people in a similar situation ask and work with a team that can answer all your questions.
• Work with specialists rather than generalists so you'll get better advice and care.
• Look for a portfolio manager who has the experience and qualifications to be your guide.
• For proper tax and estate planning, work with a qualified cross-border accountant and cross-border lawyer.
• Take the time to research who you want to work with and go with one wealth management team rather than splitting your portfolio between two firms. This allows you to manage your risk exposure appropriately.

Next Steps

If you’re planning your retirement and need help with wealth management, estate planning, and portfolio management, please get in touch. At SWAN Wealth, we specialize in cross-border financial planning and wealth management.

More Cross-Border Financial Planning Articles & Guides

If you’re planning a cross-border move, these articles and guides will help you simplify your move and make sure you’ve got everything covered.

Roth IRA Canada: How to Manage Your Investments Across the Border

The Ultimate Financial Planning Resource for Dual Citizens or Green Card Holders Living in Canada

401k in Canada - A Comprehensive Guide to Help You Stay Onside with the IRS and Avoid a Large Tax Bill

Retiring to Canada - A Financial Planning Guide

Financial and Tax Planning for US Citizens Living in Canada

Canadian RRSP Facts for Dual Citizens, Expats and Canadians

Cross-Border Estate Planning

Information in this article is from sources believed to be reliable, however, we cannot represent that it is accurate or complete.  It is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell securities.  The views are those of the author, SWAN Wealth Management, and not necessarily those of Raymond James Ltd.  Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor’s circumstances and risk tolerance before making any investment decision.  Raymond James Ltd. is a Member - Canadian Investor Protection Fund. Raymond James (USA) Ltd., member FINRA/SIPC. Raymond James (USA) Ltd. (RJLU) advisors may only conduct business with residents of the states and/or jurisdictions for which they are properly registered.

About the Author

Tiffany Woodfield is a dual-licensed financial advisor and the co-founder of SWAN Wealth Management, along with her husband, John Woodfield. Tiffany specializes in advising clients who live both in Canada and the United States and need to simplify their cross-border financial plan, move their assets across the border, and optimize their investments so they can minimize their tax burden. Together Tiffany and John Woodfield help their clients simplify their cross-border finances and create long-term revenue streams that will keep their assets safe whether they live in Canada or the US.

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