December 18, 2020
What is International Financial Planning?
As globalization becomes more apparent in our lives, there is an increase in the number of people moving around the world and owning properties in more than one country. We are all global citizens which means we have the ability to live where we choose, however, what happens to your finances and taxes when you make the big move?
Ashley Murphy is a tri-citizen of the USA, Australia, and the UK. He has had years of first-hand experience of what it is like to not only move to another culture but deal with the side no one really talks about – finance, insurance, and tax. His niche of international financial planning developed from his experience when moving from Australia to the USA in 2005. He spent years looking for more information on international financial planning but couldn’t find what he was seeking. Murphy decided to bring the information together and help others who are in the same boat. He is a CFP in America and is currently studying the CFP in Australia which will make him one of the few financial advisors to be qualified in both countries.
International financial planning is working with clients that have moved, are moving, or own properties, in two countries. The clients Murphy works with are in various stages of their expatriate journey, someone who has been sent by their firm to a foreign country, there has to be something already in motion, he said. Whether that is a job offer, or they have already moved, or the dream the couple had is finally being planned. The clients come to him with a set of concerns or questions, seeking the answers they need to continue their motion of moving.
Financial Planner’s Change in Australia
In Australia, there has been a recent decrease in the number of those working in the financial planning field due to regulation changes, Murphy explained. Last year, there were 2400 departures and just 15 entrants into the financial planning field. The commissions have now been restructured to be fee-only changing the way planners work and interact with their clients, Murphy said. This new change is difficult for any financial institutes to adopt, including CFPs.
This new commissions structure is different from how commissions work in the US. In the US there are typically three business models; the first model is commission only, the second model is commission and fee-based, and the third model is fee-only.
Murphy shared an example with the webinar about how this new change in Australia is creating an expensive barrier. “If someone with a 401K plan is seeking advice for their average funds, they will want to move from a high-cost structure to a low-cost structure,” Murphy said. This is a relatively simple and easy answer that people are seeking the recommendations for but the high fees are creating an expensive barrier, he said. The commission restructuring has changed the way financial planners need to work in Australia. “Having clients in different countries with different complexities, we’ve really had to tweak how we work with them to make it profitable,” Murphy said.
Knowing Your Countries
Every country is different with their taxes, retirement plans, insurance, etc. therefore as an international financial planner it is important that you know both the countries you are working with, he said. Taking on a client with countries that you are not specialized in, nor have worked with before, is a huge challenge and it will consume your time with trying to learn and understand how it works for the client. It sounds very ethnocentric, he said, but it is important to concentrate on certain information. There is not enough time in the day to work with clients who have a multitude of living in other countries. As a planner, you must know your limits of much you can take on and help your clients. Therefore, you must know when to turn them to someone that can help them more than you can.
Murphy’s specialty in Australia and America is what makes his business effective. He understands the financial services and planning of both countries and has even had first-hand experience of living in both. “Clients are seeking to reduce the number of contact points. People are busy, so if they can meet with someone that understands both environments and has this knowledge set, it is beneficial to them. You need the US financial knowledge, the knowledge of the foreign country, and the knowledge of how the two work together. It’s going to be unique” he said. Every combination of countries is different which is why it is important to have your niche.
Murphy also explained that when working with an international financial planner, it is best to work with someone who lives in the same country you are currently living in. Murphy works and lives in the US, therefore, although his knowledge of Australia’s financial planning is fantastic, it will never be quite as good as someone who is currently living there. “Someone that lives and breathes the news cycles, the updates in retirement and tax laws, they are hearing about the changes that are happening,” he said.
Working with Tax
Each country’s tax treaty differentiates, he said. It’s important to know when the treaty came into existence in relation to the other country. This is why it is a good idea to work with a handful of tax attorneys to seek their advice and bounce it off one another as they will all have varying opinions. Further, you need to have trust in the service providers, but also in yourself. Take the time to weigh in your thoughts even if you’re not an expert by using knowledge and interpretations, Murphy said.
“You need to be competent,” he said, “The riches are in the niches.” When a client works with someone who has made it their career to specialize in those countries, it helps them more and you.
When many clients move across borders they have the benefits from the employer but still need help. They have tax help but it is more compliant for the employer with little to no focus on personal finances. “I think we’re beginning to see the very start of executive cross-boarding financial services,” Murphy said.
The generation of baby-boomers is beginning to move into retirement. During this time, many decide to migrate to another country and live their dreams on a warm, tropical beach or an apartment in a European city. Retirement cross-border planning could be a niche that the financial industry may see developing in the next few years.
Ashley is a tri-citizen of the USA, Australia, and the UK. In 2005, he ventured to the United States to pursue his dreams in the San Francisco Bay Area.
He has been quoted in the Wall Street Journal and was profiled in Financial Advisor Magazine. From 2014 – 2017, Ashley taught aspiring CFP candidates at UC Berkeley Extension and Golden Gate University. Presently, he is a Knowledge Circle host for the International and Cross-Border Knowledge Circle with the FPA and a regular conference speaker. He was awarded the CFP® designation in 2012 and voted Secretary of FPA NexGen the same year. Ashley is currently undertaking CFP® studies in Australia which will make him one of the few financial advisors qualified in both countries when completed.
Dr. Chia-Li Chien is a succession program director at Value Growth Institute, a succession consulting practice dedicated to helping business owners increase their firms’ equity value. Before her private consulting practice, she held several senior management positions in Fortune 500 companies. Dr. Chien is a director of the financial planning program at the School of Management at California Lutheran University. Dr. Chien is a frequent speaker about succession and retirement planning at national conferences and has published three award-winning books, including her most recent publication, “Enhancing Retirement Success Rates in the United States.” Dr. Chien serves on the boards of various national financial service associations. She holds a doctorate in financial planning and is a Certified Financial Planner (CFP®) as well as Project Management Professional (PMP®).
Rosie Baker is an undergraduate student at California Lutheran University, graduating in May 2021. She is studying Communication with an emphasis in PR and Advertising and has a minor in Creative Writing. In July 2020, she published her first book, Mirrors & Windows: Unlocking a New Framework to Envision Your Success, with New Degree Press.
Dr. Chien interviewed Ashley Murphy, CFP®, AIF® on “What is International Financial Planning?” on Dec 2, 2020, at 1:00pm PST.
Globalization fuels the need to move top talents to enable them to expand their markets. As a result of these talents who are working outside of their home countries, their wealth grows internationally. Hence, international financial planning becomes complex. In this session, we will discuss the following questions:
- What are clients with dual or tri-citizen typically looking for in planning?
- What can financial planning professionals do to help dual or tri-citizen clients?
- How about a non-us citizen spouse?
- Why is international financial planning in demand?
Resource: Global Financial Planning Institute