Offshore

New Wealth House Serving US Expats Explains Investment Angle

Tom Burroughes, Group Editor, 13 September 2021

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UK-based Shard Capital created a new service a year ago for US expats. The business has a very particular view about risk, asset allocation and investment, and talked recently to this publication.

More than a decade ago when the US tightened tax rules affecting expats and Green Card holders, expats struggled to access financial services, such as wealth management. That was a problem for high net worth Americans, never mind the wider population. 

Fast forward to 2021, and while the situation is still difficult, more players have entered the fray. One such is Shard Capital, a UK-based business which launched a wealth management service in July 2020, called LeifBridge, for US expats living in the UK. Shard Capital, which was founded in 2010 as an institutional fixed income broker, is located in one of London’s most recognisable buildings – the “Walkie Talkie” tower in the City. 

This publication recently spoke to Mike Hollings and Ernst Knacke at Shard Capital to understand the thinking behind the new LeifBridge venture, as well as to explore Shard’s specific investment philosophy. Hollings is chief investment officer of the Shard Capital investment committee; Knacke is head of research at Shard and LeifBridge.

Firstly, this news service asked the men about the US expat business at LeifBridge. 
 
“LeifBridge is a private investment service dedicated to looking after international clients. We provide discretionary and advisory investment services to a wide range of high net worth and ultra-HNW clients, working closely with them and their advisors to identify the right investment strategy to help meet a broad range of their objectives,” they said. 
 
“We have a particular expertise in managing the investment needs of US citizen expats and our highly tailored service, together with our expertise in this area, means we are able to help implement investment strategies which integrate all aspects of global, multi-asset, investment whilst taking into account the complexities of cross-border tax,” they continued. 

“The financial affairs of a US citizen expat are rarely straightforward and managing investment portfolios can add complications. We understand the specific challenges that our clients face in navigating the jurisdictional complexities of investing and the implications of cross-border tax. We have an extensive network of professionals with whom we partner and are happy to work in conjunction with clients’ existing advisors to ensure that the investment strategies and the portfolios we construct fit in with our clients’ overall wealth management plans,” they continued. 

That there are challenges cannot be denied. In 2010, US President Barack Obama signed into law the Foreign Account Tax Compliance Act, or FATCA. It was passed into law as part of the unrelated jobs legislation known as the HIRE law. FATCA was drawn up mainly in a response to the 2009 UBS off-shore banking scandal which showed that many Americans sheltered financial holdings in secret Swiss bank accounts. (UBS was by no means the only Swiss offender.) FATCA imposes a new legal mandate on all foreign financial institutions to determine who among their clients are “US Persons,” and reports directly to the IRS information on those clients’ accounts. One immediate result was that in the months after the law took effect, non-US banks and other institutions started shutting their doors to US clients, as was the case with HSBC and Deutsche Bank, for example. Groups representing expats, such as American Citizens Abroad, have called on Washington DC lawmakers to shift away from worldwide to residence-based taxation. This appears to be an uphill battle given the Biden administration’s hunger for revenue. 

There are, however, a number of institutions that serve US citizens abroad, such as London & Capital, Royal Bank of Canada, Schroders, and MASECO. LeifBridge is a new addition.

This news service asked Knacke and Hollings what are the qualifying conditions to be a client of this service?
 
“We do not have any pre-set conditions for becoming a client as we recognise that each and every client is different. We take the time and care to get to know our clients and, by combining an in-depth understanding of their requirements, combined with our collective investment experience, expertise, technical knowledge and resources, we can develop a tailored investment strategy for each and every client,” they replied. 

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