How a Cross-Border Advisor Can Help
Tiffany Woodfield, Senior Financial Advisor, Associate Portfolio Manager, CRPC®, CIM®, TEP®
Summary of Key Points
Cross-border planning is more complex than Canadian-only or US-only planning, so choose an advisor experienced with American or dual-citizen clients.
Check advisor designations and whether investments are managed in-house, as outsourcing can lead to cookie-cutter portfolios and higher management costs.
Confirm that the firm provides full IRS tax receipts for US persons and tracks cost base, which is complex and time-consuming to do yourself.
Ideally, work with a team that both manages investments and creates an ongoing financial plan that adapts as your life changes.
Using separate Canada and United States advisors can lead to mistakes and under-optimized portfolios; an integrated cross-border team can simplify management and tax minimization.
Video Script
In this video I’m going to cover the most important things for Americans and dual citizens to consider when looking for a cross-border advisor.
Hi, I’m Tiffany Woodfield, a cross-border advisor, associate portfolio manager, and co-founder of SWAN Wealth Management.
Over the past few years, I’ve spoken to hundreds of people with cross-border investments. I’ve noticed that there tends to be a lot of confusion around cross-border financial planning and investment management.
So, the goal of this video is to guide you through the top 5 things to consider when looking for a cross-border advisor so you can feel more confident and prepared as you meet with advisors.
1 - Work with Specialists
If you’re seeking the guidance of a cross-border advisor, select a team of specialists with experience helping people like you.
Cross-border financial planning is more complex than either Canadian or US planning alone. There are certain investments that you need to avoid, and you can easily fall into traps that cost you time and money.
Before you start working with an advisor, check their designations and ensure they specialize in cross-border.
2 - Find Out About Portfolio Management
When speaking with cross-border advisors, find out if they will build your portfolio and manage your US investments in-house.
If your advisor is outsourcing portfolio management on the US side, you may not get a customized individual portfolio and end up with a cookie-cutter portfolio with higher management costs.
3 - Find Out About Cost Base Tracking & Tax Slips
Ensure that your cross-border financial advisor will make tax time easier for you.
Look for a cross-border advisor that will provide two full sets of investment tax receipts, one for your Canadian tax return and one for your U.S. tax return. This saves your accountant time and you money. Most Canadian firms can only produce tax receipts for a US investment and don’t translate all your investments for a US tax return because this is what non-US persons need.
A US firm won’t produce tax receipts to report to the CRA. So, if you kept your investments in the US and live in Canada, this causes complications at tax time.
Find out if your cross-border advisor firm will track your cost base. Tracking your cost base is important. But it’s also complex and time-consuming. We don’t recommend doing it on your own.
At SWAN Wealth, most of our clients are experts in their field who are ready to retire or move towards a work-optional lifestyle. They don’t want to spend time worrying about their investments and cross-border taxes. Instead, they want to spend their free time relaxing or pursuing their next big adventure.
4. Cross-Border Advisors vs. Planners
Next, people are often confused about whether they need a cross-border financial advisor or a financial planner.
Ideally, you'll work with a team that can invest your assets and create a financial plan that guides you toward your goals. You can get someone to do a one-time financial plan for a fee. But if you have substantial assets, that’s not enough.
You still need an advisor to invest your assets in a way that helps to minimize tax and helps you achieve your goals.
5 - One Team
Finally, if you have an advisory team in the US and Canada, they may not know or understand what the other team is doing.
Having two advisory teams can lead to mistakes that cost you time and money. It can also result in an under-optimized portfolio. To ensure that your investment portfolio is optimized according to your goals and that you’re not overpaying your taxes, we recommend working with one financial advisory team.
SWAN’s Services
At SWAN Wealth, we offer comprehensive cross-border wealth management, which includes tax planning, estate planning, financial planning, and investment management.