As I surveyed the dessert table at a wedding recently, I got a call on my cellphone. The caller sounded frantic, and after explaining that I was at a wedding and couldn’t really hear him well, he said he couldn’t wait for me to call him back the next day. I left the hall and he proceeded to tell me that he had just received a call from his broker, at a well-known firm in the US, saying that he had to either close out his account or transfer the account to another firm. I knew the broker and  called him. He told me that he just received a memo saying that barring several exceptions, accounts with non- US addresses that have less than $250,000 in assets would be closed or transferred within two weeks.

Continuing Trend

This is not the first time that I have heard of new policies regarding accounts with foreign addresses, though it’s the first time that I have heard of a firm trying to get rid of these accounts. Some firms have prohibited clients with foreign addresses from purchasing certain products (mutual funds), even if they are US citizens who happen to live abroad. Other firms have created special divisions, and forcibly transferred client accounts to these new divisions, even if the client had a long-standing relationship with his broker. I recently met someone who had been working with the same advisor in Seattle for 36 years, and received  a letter informing of his account’s transfer to a new advisor in Houston.

Why the Change

Since the terrorist attack on the World Trade Center, US firms have taken a very strict approach to non-US domiciled

Many accounts belong to children of olim, who were born here and hardly speak any English.

accounts.  The passing of the Patriot Act and other new laws, have made it much harder for these firms to accept accounts from US citizens living abroad, and many firms have just decided that they would rather not put themselves into this situation. They have either decided not to accept any non US new business or have set up a new division to deal with these accounts. Brokers on these accounts fought tooth and nail to keep their clients, but the compliance departments won out.

Are Your Children Sabras

The aforementioned broker who is being forced to get rid of non US accounts under $250,000, also told me that of the fifty or so accounts of which he must divest himself,  about thirty belong to children of olim, who were born here and hardly speak any English.

  

The issue of children having accounts in the US that their parents set up is a common one. He mentioned to me that most of these children don’t even know how to dial the US, let alone handle a conversation about their finances in English. They would have a hard time trying to access the money that has been put aside for them. Not only that but the advisor in the States doesn’t know them, and is unfamiliar with their long-term goals and needs.

What to Do?

 I would recommend going local. I would find an advisor who is licensed both in Israel and in the US, to handle the accounts.  Not only would this professional be attuned to needs in Israel, he would also speak the language of the children, and in general make it easier to go forward with the children.

In addition, a local advisor who has an arrangement with a US firm will not have problems vis-à-vis buying any investment products. He will have all their compliance agreements in place, allowing the client to have access to the wide array of investment choices that he  expects.

Aaron Katsman is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. a registered broker dealer, Member FINRA, SIPC, MSRB, NFA, SIFMA. For more information, call (02) 624-0995 or email [email protected]