UK Financial Advice for US Expats

If you're an American living in the UK, you might have encountered a frustrating situation: trying to find a financial adviser to help manage your investments, review your insurances or to help you plan for retirement, only to be turned away because you're a US citizen. 
 

It's a common occurrence that leaves many US expats in the UK wondering, "Why is it so hard to get financial advice here?"
 

In this article we will unpack the reasons for this reluctance and explore some potential solutions for US expats like you, who are seeking financial guidance whilst living in the UK.
 

A Complex Dual Tax System

At the core of this issue is the unique tax situation that US citizens face. Unlike the vast majority of countries, the US taxes citizens on their worldwide income, regardless of where they live. 

This creates a complex web of considerations for UK financial advisers, such as:
 

1. Dual Tax Reporting: US expats are required to file tax returns in both the UK and the US. 
   
   This means that any financial advice must consider the tax implications in both countries, which is a daunting task for advisers who are not well-versed in both US and UK tax legislation.
   
    
2. US-UK Tax Treaty Nuances: While there is a tax treaty between the US and UK to prevent double taxation, its application is complex and varies depending on the type of income or investment, and is a far more complicated set of rules than dealing with other expats.
    
3. PFIC Pitfalls: Many UK investment products are considered Passive Foreign Investment Companies (PFICs) by the IRS, meaning that they are subject to punitive tax treatment. UK advisers may not be familiar with these rules, and therefore risk inadvertently harmful advice.

FATCA: The Regulatory Burden

The Foreign Account Tax Compliance Act (FATCA) has significantly impacted how financial institutions worldwide interact with US clients.
 

1. Reporting Requirements: FATCA mandates that foreign financial institutions report on US clients' accounts to the IRS. 
   
   This also extends to financial advisers managing investments for US citizens.
    
2. Compliance Costs: Meeting FATCA requirements often requires additional administrative processes and systems, resulting in increasing costs for advisers.
   
    
3. Fear of Penalties: Non-compliance with FATCA can result in severe penalties, making some advisers wary of taking on the risk associated with US clients.

A Regulatory Mismatch

UK financial advisers face a challenging regulatory landscape when dealing with US clients:

1. FCA vs. SEC Regulations: UK advisers are regulated by the Financial Conduct Authority (FCA), but advising US citizens on certain securities might require SEC registration - a complex and costly process for UK-based firms.
   
    
2. Different Investment Landscapes: Products and strategies that are common and beneficial for UK investors might be unsuitable or even detrimental for US taxpayers.
   
    
3. Liability Concerns: The perceived litigious nature of the US system makes some UK advisers hesitant to take on American clients, fearing potential lawsuits if something goes wrong.
    

A Professional Indemnity Insurance Hole

Many UK financial advisers find that their professional indemnity insurance doesn't cover advice given to US citizens, or comes with prohibitively high premiums for such coverage.
 

1. Increased Risk: Insurers view advising US clients as higher risk due to the complex regulatory environment.
   
    
2. Cost Implications: If coverage is available, the increased premiums can make it commercially unattractive for advisers to take on US clients.

So, What Can US Expats in the UK Do?

While finding a UK financial adviser might be challenging, you're not without options:
 

1. Seek Specialised Advisers: Look for UK firms that specifically cater to US expats. They exist, although they may be fewer in number.
   
    
2. Consider Dual-Qualified Professionals: Some advisers hold qualifications in both UK and US financial planning, making them ideally suited to help US expats in the UK.
   
    
3. Explore US-Based Options: Some US financial advisers specialize in helping expats and may be able to provide guidance even while you're in the UK.
   
    
4. Educate Yourself: Understanding the basics of cross-border taxation and investment can help you better navigate your financial landscape and identify suitable advisers.
   
    
5. Use Online Resources: There are growing online communities and resources specifically for US expats in the UK, which can provide valuable insights and recommendations.

The Silver Lining for US Expats

As more Americans move to the UK for work or personal reasons, there's an increasing awareness of the need for specialized financial advice. Some UK advisers are recognizing this as a valuable niche and are developing the expertise needed to serve US expats effectively.
 

If you're an American citizen in the UK and are looking for investment specific advice, read our guide to Overcoming the Challenges of Investing as a US Expat.

In the meantime, don't be discouraged. While finding a UK financial adviser as a US citizen may be more challenging, it's not impossible. Be patient, do your research, and don't hesitate to ask potential advisers about their experience with US-UK cross-border financial planning. 
 

Remember, your financial well-being is important, and with persistence, you can find the right guidance to help you navigate the complexities of being a US expat in the UK financial system.
 

If you're a US Expat looking for help with your finances, get in touch with the US team at Aventur to find out how we can help.