Olim from the United States are being evicted from their US financial institutions, thus creating a bureaucratic nightmare – and that is even before worrying about their 2018 portfolio returns! A sizable number of US institutions no longer wish to custody or manage investments on behalf of citizens who are no longer resident in the US. Wells Fargo, Fidelity and Bank of America Merrill Lynch have all written to their clients in the last 18-24 months requesting that clients transfer their assets to other investment houses. Trying to organize this from afar can be stressful and difficult for those affected. Plenty of olim and potential olim from the US are retirees who have invested with the same US institution for a lifetime, making this whole process even more unsettling. Unlike olim from almost every other jurisdiction, immigrants from the US will continue to report their global income to the IRS and pay taxes. This often entails American olim having a lower focus on the details of their US investments, and it falls below almost everything else on their aliyah priority list. Undoubtedly, the focus on moving assets out of countries like the UK, Australia or South Africa is a big push to ensuring that new immigrants from those countries focus on their finances prior to aliyah. American olim, however, who fail to prepare their portfolios prior to moving here, can lose out significantly as a result. This occurs for three main reasons. Firstly, it is simply easier from an administrative perspective to open new financial relationships while still based in the US. Secondly, US non-resident taxpayers are taxed differently on certain investments and it is prudent to arrive in Israel without exposure to certain financial products that can lead to punitive tax rates. Thirdly, American mutual funds will not want to continue to serve clients who move abroad and clients may be forced to sell these investments. For the American oleh, managing their retirement savings should be compared to “dancing at both weddings” – a dollar-based income and a shekel-based household spend. Having some investments denominated in shekels to provide at least some monthly shekel income is also worth considering. This is even more important to consider for those olim who have been here 10 years and now have to declare all their income to the Israeli tax authority anyway. aaron@piowealth.com The writer is a senior wealth manager at Pioneer Wealth Management.
