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Unraveling Cross-Border Financial Planning

What unique financial planning challenges do individuals face when they live full- or part-time in the US but have Canadian citizenship (or vice versa?) How can you help clients who straddle two countries? And more to the point – should you always be the one to help them? Today’s guest is diving in deep to help you understand the pertinent issues around cross-border financial advising.

Terry Ritchie is a Partner and Director of Cross-Border Wealth Services for Cardinal Point, with offices in Toronto, Calgary, Irvine, Phoenix, and Boca Raton. He is a Registered Financial Planner in Canada and is enrolled to practice before the U.S. Internal Revenue Service as an Enrolled Agent. Terry is also a Trust and Estate Practitioner affiliated with the Society of Trust and Estate Practitioners. He has been practicing cross-border financial, investment, tax and estate planning for more than 30 years. 

What You’ll Learn in This Episode: 

  • What actually drives people to move between Canada and the United States (6:45)
  • Why cross-border work matters to Terry (10:10)
  • What advisors need to know about visas and green cards (13:40)
  • Important elements of U.S. income tax (23:50)
  • Investment limitations of Canadians in the US (28:10)
  • How cross-border living affects estate planning (37:10)
  • The biggest cross-border planning mistake you can make (43:45)
  • Terry’s #1 tip for growing a career you really love (53:20)

 Links and Resources: 

Cardinal Point

Email Terry

Quotes by Terry Ritchie: 

“I can quantify the numbers that you might be better off from a tax perspective in that jurisdiction or country versus this one. But really at the end of the day, it’s truly around lifestyle. Where are they going to be happiest?”

“It’s just the nature of the business. Markets go up and down… Tax laws change. Family dynamics change.”

“Advisors have a right to say no,” he says. “There has to be a fit – on both sides.”

Terry’s firm, Cardinal Point, offers a total solution to individuals who have Canadian and American financial matters – snowbirds, those who have dependants in one country while living in the other, and those who move between the two countries. And as someone who has financial matters in both countries himself, he has unique insights into what it takes to plan for people like him.

Below, we’re sharing three key ideas from this episode:

  • What actually drives people to move between Canada and the United States
  • The biggest cross-border planning mistake you can make
  • Terry’s #1 tip for growing a career you really love

For the rest of the episode, find the podcast on iTunes or Stitcher, or hit the link above.

What actually drives people to move between Canada and the United States

If you were paying attention to social media around the 2016 American election, you probably would have heard Americans who were dissatisfied with or worried about the results and saying that they would be moving to Canada. However, that flood of Americans moving to Canada hasn’t panned out.

It turns out that tax talk doesn’t much affect people’s decisions about where to live, either.

“I can quantify the numbers that you might be better off from a tax perspective in that jurisdiction or country versus this one,” says Terry. “But really at the end of the day, it’s truly around lifestyle.” It’s about where they see themselves living and where they will be the happiest.

Healthcare is often a big factor, but family is the biggest reason for people choosing to live in one place over another. Terry has had clients go through many of the steps required to permanently move to the United States… until a grandchild in Canada came along and changed all of their plans.

It’s important to know all of the factors going into a move or change of citizenship, but people rarely act purely in their financial best interest – and that’s ok.

The biggest cross-border planning mistake you can make

The biggest mistake Terry sees financial planners making in the area of cross-border planning is… well, taking it on at all. If they’re not well-versed in it, that is.

If it’s not your niche, the truth is that you probably don’t have the skills needed to do cross-border planning effectively. And it’s not subject matter that you can just brush up on in a weekend seminar and be ready to go.

If one thing is clear from Terry’s advice, it’s that cross-border planning is very complex. From limitations on holding investment accounts depending on where an individual resides or has citizenship to multiple sets of tax laws to immigration… there is a lot of liability for the client, for you, and for your firm.

Not to mention that all of these laws change from year to year, and just keeping up with the updates and knowing how they’ll affect clients is almost a full-time job in itself.

If you don’t have the background to take on a certain aspect – or even the entirety – of your client’s planning, there’s nothing wrong with bringing someone else in or referring them to someone who can offer them the services and experience they need most. Yes, it can be hard to let go of the AUM (and the pay that comes with it…), but, put simply, “if you don’t know what you’re doing, you shouldn’t be doing it.”

Hint: If you’re looking for advice on working with other financial professionals, listen back to the show with Cindy Radu, where she discusses bridging the gap to work effectively with other advisors.

Terry’s #1 tip for growing a career you really love

Terry really wants you to take away that you don’t have to do everything for every client.

At the beginning of your career, it’s easy to feel like you have to take on any client and do whatever they ask you to do, even if it’s not within your preferred niche.

But, says Terry, “advisors have a right to say no. There has to be a fit – on both sides.”

It’s definitely not worth it to take on people you call tell are jerks – they’re only going to cause you trouble down the road. Work with nice people so that you look forward to meeting with them and putting in the work for them. You’ll not only be happier – you’ll likely do a better job for them, too.

This goes for your niche, too. If you know what niche you want to serve (and Terry recommends having one), don’t feel like you need to work for clients who aren’t a good fit for that niche. Your time is valuable, so the time you put into your business should be spent building your expertise in a particular area, not catering to anyone who comes along.

Terry’s firm has this very well defined: they only offer full-service solutions, not individual services. If someone’s just looking to get some tax advice, they’re not the right fit.  “We’re not for everybody, but for those people that we can serve, we try to do a really, really good job.”Defining guidelines

In addition to working with good people on work you want to do, make sure you’re clear for the beginning on what the relationship is and what kind of work you will or won’t do. Setting up clear boundaries is the best way to avoid uncomfortable situations in the future.

For more helpful advice from Terry, make sure you catch the full episode where he talks about the ins and outs of the tax, estate planning, and immigration considerations that can affect financial planning. You can find the show right here on this page or subscribe on iTunes or Stitcher so you don’t miss any episodes. 

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