Wealth Management Strategies for American Expats

There are many reasons which put people off investing their money. Some of them make sense. For instance, investing while you have outstanding debts on a high-interest credit card. That might be a bad idea. But more often, we worry about staying up on market trends. We worry about ever-changing tax regimes. And we put off the investments that could lead to a better life.

For expats, that situation might seem even worse. For those of us from the US, working and living in Europe, handling filings on both sides of the Atlantic sounds nightmarish. However, investing your wealth opens up numerous opportunities for a better quality of life. You might be able to bring in more money for a dream home or seek early retirement. You shouldn’t miss out on these prospects out of fear of cross-border red tape. To help you get past those initial fears and embark on your investment journey with confidence, Impact Financial founder Brett Spencer has agreed to let Expat Republic in on some of his secrets.

He explains, “Life is short. I’m not in medicine, so I can’t extend your time. But I could help make the most of what you’ve got. That’s why this area of personal financial planning has always been a passion of mine. To me, helping you figure out retirement, how to make the most of what you have, and simplify things, is so rewarding. That’s what drives me and what I help clients with.”

That’s not always easy. Spencer admits that “wealth management for Americans abroad is a huge topic”. One with a myriad of “pieces”, which impact each other and need to be tackled together. “Investment decisions, for example, have tax implications. Taxes, of course, affect your cash flows. And your cash flow determines how much you have available for investment in the first place.”

Beyond these initial complexities, once abroad, multiply the complexity by 2 as you have to deal with “US and non-US stuff.” That’s a lot to deal with alone. But a cross-border wealth manager can help coordinate all of these pieces together. Using a consultative process, they can distil what you want to make of your wealth and find solutions that will keep you on the right track in meeting your goals.

Three Things for US Internationals to Prioritize

But to a newcomer, finding a wealth manager to work with might seem like a trial of its own. So, where should US expats start?

1. Seek specialized over a big name

According to Spencer, wealth managers come in all shapes and sizes. Each client’s financial situation may be best suited to a different practitioner or firm. However, based on his experience, specialisation is key, and bigger is not always better.

“I was a senior advisor at some large wealth management firms in the US,” he notes. “Some of the largest in the Midwest. It was a great experience. I led portfolio research, trained other advisors and worked with many wonderful clients. However, I ultimately felt that the large firm’s focus was more on scale and profitability than on providing unique, tailored solutions to its clients. The needs of an expat are hard to scale. However, these unique issues and the potential value I can provide are what excite me. I’m able to provide specialized service, taking the time to understand the client’s cross-border complexities and needs.”

It might be better for expats to consider firms with specializations in cross-border wealth management over a big brand. Additionally, many such firms are launched by professionals from big firms. They are often looking to use the skills they have honed on more specialized projects. Additionally, being an independent firm can also enable them to adapt a solution with more ease.

“In our case,” Spencer adds, “We’re the big firm experience with a small firm touch. Things like cross-border planning, that’s complicated, that’s very specialized. That’s something that will take both expertise and time. A firm like Impact Financial can give you that. And we’re independent. We’re not tied to any in-house products like a bigger firm. If there is a product innovation or change worth pursuing, we’re able to pursue it without corporate limitations.”

2. Look at quality control

There are many types of financial advisors, which can make selecting one challenging. A few important differentiators to look for are if they are “fee-only”, fiduciaries and have the credentials aligned with your needs.

“Fee-only” is industry terminology for commission-free. Spencer explains the importance of this differentiator, “advisors paid through commissions will have a conflict of interest as different products pay higher rates of commissions. A fee-only advisor, on the other hand, is paid only what you, the client, pay the advisor. This removes conflicts of interest.”

Moving to the importance of a fiduciary, Spencer explains, “Fiduciaries have a legal obligation to put your interests first – 100% of the time. While this is hopefully the presumption, a fiduciary status solidifies the commitment and offers you reassurance. This status also helps mitigate some conflicts of interest that you may encounter. An advisor who is only able to offer financial products of their company, for example, may not qualify as a fiduciary. In this scenario, the advisor isn’t able to explore what’s truly in the best interest of the client and has to recommend company products.”

Other marks of quality can also show broader opportunities that a wealth manager offers. For example, Impact Financial is a member of the Global Financial Planning Institute. The institute provides educational and networking opportunities in the cross-border financial planning sector.

Spencer adds, “Let’s say you want to buy a property in Greece. We can go to that network to say, ‘Are there any real estate attorneys that are vetted? ’ We’re there along the way to help you navigate whatever issue you’re navigating. As your financial advocate in your corner, we have a network that can help collaborate with other areas of expertise in other countries.”

3. Prioritize a US wealth manager

In particular, though, Spencer warns against underestimating the importance of a US advisor. As a US national in Europe, you will be limited in the compliant investment options available to you. Partnering with the correctly registered US firms (such as Impact Financial), though, you can access US funds compliantly.

“The EU doesn’t care that you are an American. If you live and invest in the Netherlands, they will say, ‘You have to abide by our rules. At the same time, the US will say, ‘We don’t care where you live; US citizens have to abide by our rules.’ A significant issue is that the US heavily taxes and penalizes its citizens for investing in non-US investment products. The EU, on the other hand, restricts EU residents from investing in products that don’t comply with the EU laws, which US funds fall under. Now, an individual needs to be cautious of both U.S. and non-U.S. investments. What are they to do? Well, one exception to these EU restrictions is if an EU resident is working with correctly registered US advisory firms.”

In addition to avoiding these restrictions, using a US advisor can also reduce your expenses. While a Dutch advisor might be subject to a 21% value-added BTW tax, that is not the case for US advisors.

And of course, there are added operational conveniences of working with someone on US time. A US advisor can better serve your requests on the American stock market, when trading hours could lead to sleepless nights on Dutch time. And speaking of sleepless nights, a US advisor could also better help deal with the trials and tribulations of the IRS. Coordinating with the US tax authorities on US time, they can help with filings and, if needed, extensions. Not to mention, keeping up with a minefield of new rules.

Spencer cautions, “Once abroad, Americans face many more reporting requirements, higher scrutiny by the IRS and penalties and fines that are significant if reporting is missed ($10,000 per form per year in some cases). So, I stress you must make sure you have a good team, making sure you’re staying up on these things.”

He continues, “One recent example of how confusing and significant these filing requirements can be was the changing Beneficial Ownership Interest (BOI) filing requirement. The FinCEN (Financial Crimes Enforcement Network) issued a requirement for LLC owners that was initially due at the end of 2024. For late filers, the penalty was/is $500 per day. This filing requirement underwent several court ruling changes as follows: blocked on December 3rd, reinstated on December 23rd, blocked again on December 26th, reinstated again on February 18th, and blocked again on March 21st (for US entities, but still required for non-US entities). This kind of back and forth is where it’s very helpful to have a US advisor in your corner, saving you the worry and headache of staying up to date with everything.”

Three Ps to Get You Started

Once you have selected your wealth manager, the real work can finally begin. When considering a complex topic like wealth management, Spencer likes to simplify the steps into three key actions: Protect, Plan, and Perfect.

“We work to help you protect what you have, plan for your goals and can then work on perfecting and optimizing your plan.”

Protect

To protect what you have, consider the following categories: insurance coverage, protecting your cash values, your portfolio, and estate planning.

As was the case earlier, Spencer notes that there are many complexities to navigate. Insurance coverage and rates can vary depending on the country in which the policy is issued and your current residence. For cash protection, many countries offer government insurance against bank failures; however, these limits vary by country and don’t cover cash held in other countries. Portfolio protection is often achieved through proper diversification, but can also include reviewing the ownership and tax implications of your portfolio. Planning ahead for how your assets will be transferred after you pass away will ensure that the transfer aligns with your goals and avoids estate taxes, which are often very high tax rates.

Plan

When the “fun part begins”, a financial advisor will work to help identify goals for each client. They will talk to you about “where you want to be, what values you have and what concerns you.” A plan will then identify what needs to happen to meet your goals, which variables to keep an eye on, and which variables will have the greatest impact.

At Impact Financial, they offer ongoing review meetings to walk through the details of your plan, where you can also visualize and explore different plan scenarios. Spencer shares, “Each client is unique in what matters most to them. Some people want the details, while others just want the big picture. The nice thing with our tools and process is that we have the detail there for when needed, but also have some great visuals and reports for the big picture. We can tailor the information to each client’s preference.”

Perfect

Once someone has confidence that their assets are protected and there’s a plan in place, it’s easier to focus on the perfecting and optimizing stage. No plan is ever perfect, and circumstances change over time, necessitating ongoing monitoring and regular conversations. That brings Spencer to the “even more fun stage” of perfecting your plan.

All areas of your plan require ongoing conversations and refinement, but two key components of the perfecting stage are tax and portfolio recommendations.

Tax planning is complicated, especially when dealing with multiple countries and changes are occurring in your life and tax laws over time. Strategies to reduce taxes in all applicable countries are a crucial and valuable part of the planning process. Impact Financial not only offers tax filing services, but it also keeps tax planning at the heart of its planning process.

And, of course, your investments are also important to optimize. Spencer shares, “Often people are unaware of what exposures they are truly holding in their investment accounts. When there are multiple accounts in different countries, it’s easy to have multiple types of exposures that may offset one another, making for an inefficient portfolio.”

At Impact Financial, they offer free initial portfolio consults, which Spencer adds, “can be a nice way to ‘dip your toes in the water’ on reviewing any potential gaps in your portfolio and how we can help.”

So, with a wealth manager by your side, don’t let the jargon scare you off investing anymore. Impact Financial are available for a free initial consultation via their website. Brett Spencer also shares insights and strategies on how to best position your finances from a cross-border perspective in our special webinar on the subject on September 9th. So why not kick off your investment journey today? Life is, after all, “too short”.