John McCord’s article highlights the start of 2012 as the perfect time to reassess the state of your financial plan, including your investment, taxation, insurance, retirement and estate needs. When cross-border complexities are present, the need for a coordinated review is even more pronounced. The process starts with a qualified advisor and a planning analysis of the preceding year’s after-tax cash flows. An advisor should also review goals, values and time frames, and financial plans should be updated to reflect significant events. In addition, account consolidation should be considered in areas such as retirement accounts.
Articles
Cross-Border Planning Full of Conflict
This article from Advisor.ca discusses the complexities of financial planning for Americans and Canadians whose lives, assets and interests cross two borders. Cardinal Point’s James Sheldon points out that those in a dual-citizenship marriage or with cross-border assets need financial advice, investment planning, and wealth and estate planning that meet securities regulations in both the U.S. and Canada. Multiple tax jurisdictions need a more sophisticated level of advice, and one of the primary challenges of cross-border financial planning is navigating the big three: the U.S. Internal Revenue Service (IRS), the Canada Revenue Agency (CRA) and the Canada/U.S. Tax Treaty. Given the lack of continuity in how the three deal with assets, there is the potential for double taxation. The article also looks at what to consider in preparing for the Canadian departure tax and what to do with a will or tax-free savings account before making a move.
Why Work With an Investment Advisor in Lieu of a Broker-Dealer?
Cardinal Point’s John McCord looks at some of the key differences between a broker-dealer and a registered investment advisor (RIA). First, an RIA is held to the “fiduciary standard,” which legally requires the advisor to act in the best interest of clients and place client interests before his/her own, among other responsibilities. The broker-dealer model holds advisors to a less strict “suitability standard,” which requires that investments and services be merely suitable for clients. Compensation is another key difference, as the broker-dealer structure puts advisors under intense pressure to generate profits through higher revenue transactions. By working under the fiduciary standard, an RIA advisor is freer to focus on prudent investment processes and holistic strategies that meet client objectives. The article closes with the importance of selecting a fiduciary advisor who utilizes a fee-based compensation model and the services of a third-party custodian.
Cross-Border Financial Advisors Are in Demand
This article emphasizes the need to review financial planning and investment matters with a team well-versed in cross-border issues prior to any move, as a lack of proper planning can often result in higher taxation, poor estate planning and enhanced risk. It can be hard to identify an advisor who is qualified to offer financial advice on both sides of the border. The best strategy is to employ an advisory team that has the ability, platform and knowledge to manage assets in Canada and the U.S. under one cohesive strategy. A successful strategy requires in-depth knowledge of Canadian and U.S. tax systems and collaboration between cross-border financial advisor professionals (financial advisors, CPAs, attorneys, etc.).
Part 4: Preparing to Exit the United States for Canada?
In part four of the series, John McCord examines how to adjust one’s risk management strategy when moving from the U.S. to Canada. Important considerations in this financial planning scenario include insurance and healthcare. The article discusses the mechanics, availability and restrictions of the Canadian healthcare system. It also looks at important questions to ask if one returns to Canada when holding U.S.-based life, disability and long-term care insurance policies.