Tips For Working With International Clients

By Addie Murdock

In the past, logistical and legal issues hindered advisors who wanted to work with high-income international clients – that is, noncitizen, nonresident clients – investing in the U.S., but recent changes have opened up this significant potential market to American agents.

This market exists entirely separate from noncitizen legal residents of the U.S., for whom advisors follow the same rules as they do in their work with citizens.

As the world becomes even more interconnected, advisors who work with global citizens investing in the U.S. will find new business opportunities and an avenue for growth.

A Changing Landscape

Until very recently, some international investors were actually removing money from the U.S. due to the Foreign Account Tax Compliance Act. The act sets penalties on nations and overseas financial institutions that fail to report U.S. citizens’ overseas assets.

For some nations who comply, the U.S. reciprocates by sharing information on their citizens’ American assets. These information tradeoffs caused some international investors to dump American assets.

In 2018, however, much of the world began implementing a stricter set of rules called the Common Reporting Standard . The U.S. declined to ratify the agreement, and continues not to share information with many countries on their citizens’ American assets. This has once again made the U.S. a favorable destination for wealthy international investors.

For advisors who live in communities where affluent nonresidents invest, these prospects may not simply show up on your doorstep. Instead, advisors should reach out to accountants and attorneys they already have professional relationships with and let them know they’re open to working with international clients should they have any referrals.

Tap into personal networks which contain potential clients if they include American immigrants or citizens of other countries.

Specific Needs

When working with noncitizen nonresident clients, advisors must be aware of American legal and contexts they may have to explain, and be ready for clients to introduce their nation’s legal rules in turn.

When I first started working with international clients, I found that they regularly ran into issues with estate taxes. While U.S. citizens and legal residents pay no taxes on the first $11.8 million in value of a taxable estate, noncitizen nonresidents only avoid taxes on the first $60 thousand.

Not only is this a significant difference, it can come as a shock to citizens of nations with no estate tax at all. Advisors should be prepared to explain not only the legal differences, but the concept of estate taxes. This preparation will help advisors enact clients’ wishes for distributing inherited assets, which may need to follow different legal or cultural guidelines.

Life insurance represents another area in which the U.S. has a much more developed legal regime than many other countries, also helping to attract international investors. Many clients want to purchase American insurance policies even if most of their portfolio investments are overseas.

Advisors who take on nonresident clients with standing life insurance policies should do a full policy review because some policies are probably old or underperforming, and the client may not be aware.

Keep in mind another extremely important rule: advisors should only solicit American insurance products to clients on American soil. It is illegal to solicit American insurance products overseas, and the potential penalties include fines, jail time and loss of licenses.

Though it happens less often than one might expect, some international clients use a translator. When this happens, prepare additional documentation demonstrating that clients, advisors and translators all understand the specified obligations and responsibilities of each party.

Working With Insurance Partners

Ten years ago, most insurance carriers lacked formal procedures for working with international clients. After all, noncitizen nonresidents lack Social Security numbers, passports or Alien Registration Numbers, so they were missing what was then a standard requirement for working with American providers.

These days, advisors can usually ask for a “global client checklist” or something similar. These checklists are not standardized, and insurance carriers have different requirements regarding ties to the U.S., special obligations depending on country of residence and products available to nonresidents will vary.

Generally, though, most insurance carriers will want a demonstration of bona fide U.S. ties, which could be as strict as owning a home or as lax as regular travel to the U.S.

Additional requisite information usually includes an explanation for why clients don’t desire U.S. residency and proof of access to physical security and healthcare in a client’s country of residence.

Advisors should consider sending cover letters to insurance carriers that preemptively answer these questions when making inquiries on behalf of their international clients.

International clients have different needs and require different work from advisors. However, as the U.S. maintains its status as a favored investment destination, advisors who learn to help these clients will gain access to an expanding, affluent market bringing ample opportunities for growth.

About The Author
Addie Murdock is a seven-year, Top of the Table MDRT member and a principal with The Burgess Group (TBG) and joined the firm in 2002. Her primary focus is international markets, primarily Latin America and Asia. She lives in San Diego, California, with her husband, two kids and dog Muchacho, and she is an active sports enthusiast. By joining and engaging with industry peers via associations like MDRT, you can keep your skills at the top of their game.