Investment Challenges for Expats

retirement in thailand concept Opening a new brokerage account or, in some cases, simply remaining with your existing broker, can become difficult once you achieve Expat status.

There are many reasons why would should be a rather painless process has become ever so difficult as of late, but the primary reason is attributed to the events of 11 September in the U.S.A.

When the United States declared "War on Terror", that declaration triggered new world-wide anti-money laundering regulations as governments began to voluntarily work together in an effort to identify and freeze assets suspected of belonging to terrorist organizations.

As a result, many brokerage and investment houses have created new mountains of regulations and red tape that must be navigated in order to participate in moving or investing funds between countries.

Even citizens who try to open accounts in their home country, and do not have Expat status, can find it difficult if there is some quirk in their electronic history.

A well publicized incident in the U.S. tells of a recent college graduate whose on-line brokerage account application was automatically denied. The only message he received on screen was: "Application Denied -- U.S. Patriot Act. See the U.S. Government for More Information."

While "seeing" the U.S. Government for "more information" might look like an impossible task to someone older and wiser, the young man did just that and pursued the incident all the way to the highest government levels. The young man learned that he had "moved too many times" over the last 10 years and, thus, met certain "profile" guidelines. Imagine if this young man was a U.S. citizen living in Malaysia and trying to open an account in New York City.

The war alone is not the only entanglement however. Another stumbling point is that most brokerage companies require that you be a resident of the country where the account exists. Unless the firm you are considering has an office in your Expat homeland, this can pose a challenge.

There are also tax considerations that can cloud the process. Some countries exempt your Expat income which is received from your home country, but do not exempt income earned from internal sources. So, while your account might be physically located in your native country, the taxable income you are earning is based upon the rates of your Expat domicile. This creates a complex tax management situation that some brokerage houses are either ill equipped to handle, or simply prefer not to become involved with.

You might think that opting for a brokerage company that does have physical presence in your new home is the easiest solution to what seems like an overly complex problem. And, in many cases, you would be right. The only concern that some more experienced Expat investors voice is the chance that accessing and, if necessary, removing your money in its entirety, could become very difficult if a serious political or economic crisis were to strike.

A more balanced approach to the problem may be to simply turn to the larger and more worldly financial institutions, such as Barclays in the U. K., or Bank of America, in the U.S., who not only have prominent international profiles, but who also understand the unique financial difficulties of being an Expat.

You may experience higher brokerage fees using the brokerage houses affiliated with these international banks, but those fees will come with world-class service and an understanding of the Expat lifestyle.