With an increasing number of US expats relocating to the UK, UK wealth manager Canaccord Wealth has launched a new model portfolio service designed to help advisors manage complexities of cross-border investing for US citizens living in Britain.

Canaccord Wealth, a UK wealth management firm, has launched a specialist managed portfolio service (MPS) specifically for US expatriates living in the UK. It provides advisors and their clients with a professionally-managed investment solution tailored to the requirements of cross-border investing.

The new service has been developed to address demand from intermediaries to address a gap in the market for US expats, who face restrictions when investing due to being subject to both UK and US tax rules. Many investment products available to UK investors are unsuitable for US taxpayers and the consequences of investing in the wrong assets can be punitive, the firm said in a statement. (For years, US expats were seen as a compliance burden because the IRS taxes its citizens on a worldwide, not territorial, basis. See related articles here and here.)

The number of US expats relocating to the UK has been rising in recent years; they are seeking political stability and a workable lifestyle, amongst other reasons. (See an analysis here.) Wealthy Americans also represent a major non-UK buying demographic for prime real estate in London such as Belgravia, Mayfair and Chelsea.

Built by Canaccord Wealth’s specialist US expat team, which has over 20 years’ experience managing an advisory service for American citizens living overseas, the service aims to provide diversified investment exposure while remaining mindful of regulatory and tax considerations faced by US taxpayers who live in the UK.

The five model portfolios – which complement the existing advisory investment service for US ex-pats – are based on the firm’s core asset allocation framework, using selected vehicles intended to be suitable from an HMRC and an IRS perspective. This includes the use of US-domiciled, UK reporting funds and individual government bonds, where appropriate, helping investors comply with US Passive Foreign Investment Company (PFIC) rules, while remaining mindful of UK tax requirements. All five risk-rated models are available on Morningstar.

“The launch of our US-expat MPS service comes at a time when there is growing demand from intermediaries for specialist wealth management solutions for their UK-based American clients,” Antony Champion, chief distribution officer at Canaccord Wealth said. “For US expats, investing is a complex area to navigate, they face investment constraints because of their ongoing US tax obligations. Most investment solutions are not designed with cross-border tax considerations in mind and the implications for getting it wrong can be significant.”

“Our aim is to provide a solution that broadens access to investment opportunities for US ex-pats, while helping advisors and their clients manage the complexities that come with being subject to two tax systems,” he continued. “As this is such a complex area, we always recommend US citizens living in the UK seek specialist tax advisory services before they consider investing.”

Canaccord Wealth said it has engaged an independent specialist tax consultancy to review and monitor the eligibility of investments used within the portfolios for both US and UK tax compliance. The service is available through financial advisors and forms part of the firm’s broader commitment to supporting internationally-mobile clients.