Working with your clients with a US connection
In our blog, we looked at how many providers struggle with clients who have accumulated UK pension benefits but who now live overseas. Some won’t establish SIPPs for clients with non-UK addresses and many will not run SIPPs in anything other than GBP.
We take a different approach which can really add value to these types of client.
When chatting with financial planners and advisers about this subject, the conversation often comes back to US clients.
Clients with an American connection are the most common types of overseas clients that we work with, and so here we look at the ways in which we can help your US-based clients.
How we can help your US clients
US clients usually fall into one of several categories:
- Americans working in the UK with, or building up, UK pension funds
- Americans living in the US with existing UK pension benefits
- British people with UK pensions, living and/or working in the US
- Individuals who have a US Green Card and are subject to US tax reporting
Many advisers either shy away from working with people with US connections, or do not have the necessary permissions to advise them. It’s perhaps no surprise considering US tax and the associated reporting requirements are some of the most complex anywhere in the world!
Anyone subject to US tax reporting has a duty to report their worldwide assets to the Internal Revenue Service (IRS) in the United States and, where applicable, pay tax.
We should say that IPM are not US tax experts. However, over the years, by working with US Tax firms we have built a sound working knowledge of the requirements US clients have to meet.
Our network of contacts who can support clients and IFAs alike has grown over the years and, consequently, we have built up a firm understanding of the specific challenges faced by US clients with regards to their UK SIPP.
IPM will not work with a US client without the support of a client appointed US tax adviser. This is to ensure that any reporting requirements the client has in respect of their SIPP to the IRS are carried out. Note that is the client and their appointed adviser’s responsibility to ensure that these requirements are met.
We’ll typically see a US client work with the following professional third parties:
- A suitably authorised financial adviser – from a UK perspective, this is someone who understands the intricacies around UK pensions. Ideally, this firm will also have the authority to provide any advice to clients in respect of their US affairs.
- A US-compliant investment manager – when establishing the investment account within the SIPP, if the SIPP beneficiary is subject to US reporting then the investment manager will need to manage the SIPP’s monies accordingly. This includes being aware of what investments a US person can invest in, such as whether collectives should be used (also known as Passive Foreign Investment Companies (PFICs)) and providing the necessary reports to the client so that they can prepare their US tax returns on certain dates. IPM work with several Securities and Exchange Commission (SEC) firms who are also FCA regulated and specialise in this area.
- A US tax adviser – as mentioned, IPM are not US tax experts. For any client with a US connection, IPM will ask for details of who is preparing their US tax returns as the SIPP is reportable to the IRS.
Once these complexities are stripped back, IPM is simply running a SIPP with an investment portfolio, like we do for any other client.
4 reasons why IPM are different from other providers when dealing with US clients
We stand out from others when dealing with US clients for four key reasons:
- A background in dealing with US clients and an understanding of their specific requirements
- Relationships with US specialist investment houses and US tax advisers
- Our ability to run SIPPs for US clients in USD and, where required, pay both PCLS and income in USD without the need to convert this back to GBP (for ongoing regular income, IPM’s preference is that the client obtains an NT tax code)
- Providing support to our clients and their advisers to ensure they can meet their filing requirements
One final reason that our IFAs and clients appreciate what we do is thanks to our bespoke, personal service. Unlike many platform SIPPs that have a restrictive ‘tick-box’ approach, we’re personable and hands-on, chatting with our IFA partners to come up with unique solutions for their clients.
If you have clients with a US or overseas connection who you feel would benefit from our approach, please get in touch. Email email@example.com or call 01438 747 151.