In a recent conversation Raymond James super-advisor Darren Coleman explained what many Canadians don't realize—though the North American Free Trade Agreement is now decades old, getting financial business done cross-border can be surprisingly difficult.
Coleman mentions a recent challenge: A Florida man passed away and left his business to his nephew, who happened to be Canadian living in Toronto. But the company's financial firms—Wells Fargo and Scottrade—wouldn't deal with a foreigner. Wells Fargo would not move funds to Canada, would only agree to execute sell orders. Scottrade wouldn't even do that. Neither firm would move the money to a foreign account, worried as they were about being offside with regulators. The client was stuck.
"Cross border issues are much more complicated than people think, or expect these situations to be," says Coleman. "People think we exist in a global world, and that everything moves smoothly. But that's just not the case."
Americans and Canadians may speak the same language, but our respective financial systems do not communicate very well, if at all. This isn't a matter of organization reticence; it’s a matter of hyper-vigilance in the era of complex, intensive regulatory compliance. "Regulators only like organizations dealing with other companies in their region," says Coleman. As a result, "The two systems don't talk."
Luckily Raymond James was able to help out the Canadian nephew. In an effort to span the border Raymond James created a North America platform that is unique. The company has both US and Canadian office. But it has also set up a third office in the U.S. that is “staffed” with Canadian advisors who are fully-licensed to do business in the United States. That is, RJ clients in Canada have an office in the US that institutions south of the border are comfortable dealing with. In the case of the Florida asset sale RJ staff got involved. “Because we're licensed in both countries we were able to get the situation sorted out," says Coleman. "We can handle these kinds of situations, which can get complicated."
Another example: An Apple employee moved back to Canada. Her U.S. registered investment account, held by a U.S. firm, could not be moved north. "No firm would deal with her American RIA. But she got a notice saying the firm would sell in 90 days if she didn't move it. No Canadian firm could delay with this,” says Coleman. Again, RJ stepped in and managed to sort out the situation. "The client can often end up mystified that these firms won't deal with a Canadian one," says Coleman. "But this is an extremely frequent occurrence. There is no real awareness of this up here.”
Few advisors boast the kind of experience Coleman has accumulated over the decades. He started in the industry in 1992, has been with Raymond James since 2012. One of the first advisors to sit on committees for the Alternative Investment Management Association he is accredited as a Canadian Investment Manager, Financial Management Advisor, and Fellow of the Canadian Securities Institute with a Level II Life Insurance License. He is also one of the first in Canada to have three designations—Professional Financial Planner, Certified Financial Planner, and Certified Hedge Fund Specialist. But it is Coleman’s particular expertise in cross-border issues around estate planning and retirement planning to small business and succession planning that really sets him apart. "We get a lot of referrals from American financial advisors. It’s remarkable how much business is occurring in this area now.”
Today there are over one million Americans living in Canada, many of whom have not been filing taxes to the IRS. By the same token, there is an even larger number of Canadians living in the U.S. On July 1st, Canadian financial institutions began reporting information on the accounts of U.S. persons to the Canada Revenue Agency. The CRA, in turn, has started exchanging information with the IRS through the Canada-U.S. Tax Convention. That is, RJ cross-border clients—some of whom are hockey players with “interesting cases”—are more likely than ever to be in need of professional help.