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US expats hit by Merrill Lynch brokerage account closures
| Published: | 24 Oct at 6 PM |
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Following on tales of woe by USA expats on the subject of account closures by their home country banks, expat brokerage accounts at Merrill Lynch are now closed with very little notice.
The famous USA wealth management firm has sent letters to a large number of their expat clients informing them that, from October 1, their brokerage accounts would no longer be supported. Excuses given included the result of an internal review of non-US resident clients’ accounts.
According to the firm, the review confirmed its inability to effectively offer its services in investments and wealth management. The letters suggested clients would be better off with other firms as regards meeting their specific investment management requirements, and quoted increasing regulatory restrictions as the reason why clients were being let go.
Two options were suggested, either transfers to another financial institution or having assets sent to clients.
Reports from insiders state only those whose accounts hold less than one million US dollars are being terminated, giving rise to suggestions that Merrill Lynch feels its employees have better things to do than wade through the necessary due diligence and reporting in order to maintain these accounts. Many affected clients will have been with the organisation for decades and will have, over that time, paid it commissions and fees of anything from thousands to tens of thousands of US dollars.
The two given options are, basically, unattractive and tricky to get right. For the second suggestion, if the account is tax-deferred it may well attract heavy taxes as well as early withdrawal charges. The first option ignores the fact that very few US brokerage firms willing to work with US expats, with Charles Schwab recently closing all its offshore client accounts. and the few remaining firms don’t specialise in expatriate clients.
Other problems include high ongoing fees and currency conversion costs,as well as the difficulty of finding a suitably trustworthy home for released funds. The risk of an advisor parking funds in non-performing or passive investments is considerable, making it more sensible for those who have some knowledge of money management to go down the do-it-yourself route or use a ‘roboadvisor’ offering.
The famous USA wealth management firm has sent letters to a large number of their expat clients informing them that, from October 1, their brokerage accounts would no longer be supported. Excuses given included the result of an internal review of non-US resident clients’ accounts.
According to the firm, the review confirmed its inability to effectively offer its services in investments and wealth management. The letters suggested clients would be better off with other firms as regards meeting their specific investment management requirements, and quoted increasing regulatory restrictions as the reason why clients were being let go.
Two options were suggested, either transfers to another financial institution or having assets sent to clients.
Reports from insiders state only those whose accounts hold less than one million US dollars are being terminated, giving rise to suggestions that Merrill Lynch feels its employees have better things to do than wade through the necessary due diligence and reporting in order to maintain these accounts. Many affected clients will have been with the organisation for decades and will have, over that time, paid it commissions and fees of anything from thousands to tens of thousands of US dollars.
The two given options are, basically, unattractive and tricky to get right. For the second suggestion, if the account is tax-deferred it may well attract heavy taxes as well as early withdrawal charges. The first option ignores the fact that very few US brokerage firms willing to work with US expats, with Charles Schwab recently closing all its offshore client accounts. and the few remaining firms don’t specialise in expatriate clients.
Other problems include high ongoing fees and currency conversion costs,as well as the difficulty of finding a suitably trustworthy home for released funds. The risk of an advisor parking funds in non-performing or passive investments is considerable, making it more sensible for those who have some knowledge of money management to go down the do-it-yourself route or use a ‘roboadvisor’ offering.
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