To hear Frank Reilly tell the story, the roots of his $470 million RIA firm go back 38 years, to a couple of airplane tickets.
We had neighbors who were teachers, said Reilly, president of La Mesa, Calif., based Reilly Financial Advisors. They had just returned from working in Saudi Arabia, coming back to the U.S. with money to invest. They asked my father, who was in the investment business, for advice.
Franks father, Don Reilly, saw an opportunity so he and his wife flew out to Saudi Arabia in 1975. They found many Americans working for Saudi companies with generous salaries, attractive benefits, and few ways to spend their money. An American working in Saudi Arabia for 20 years or so may take early retirement with a portfolio north of $2 million. Consequently, Don Reilly began helping these Americans with their investments, their taxes, their financial planning, and their estate planning.
We set up our present company in 1999, as an RIA, Frank Reilly said. My Dad is now semi-retired, but we still work extensively with Americans employed in the Middle East. Face-to-face contact is very important to these clients, so we just established an office in in Al-Khobar, Saudi Arabia, in February.
According to Reilly, his firm had been attempting to open a Saudi Arabian office for several years. Finally, we found one of our advisors who would be a good fit, he said. Mark Shane has a desire to see more of the world and a willingness to take on challenges.
Language is not an issue, Reilly said. The clients are Americans and English is the business language of the Middle East, facilitating communications with local officials. Nevertheless, there are securities laws and registration requirements to deal with, when opening an office in a foreign country.
Saudi Arabia has its own unique barriers to doing business there, Reilly said. In order to even get a visa to enter you must have a Saudi partner sponsor you. We have been very fortunate that we have a relationship with a Saudi family willing to take care of this for us.
Planning for clients working abroad may need special expertise. Clients need to know how to deal with the foreign earned income exclusion, Nate Nieri, a financial planner with Reilly Financial, told Financial Planning. Estate planning can be a challenge, too, especially if a client marries someone who is not a U.S. citizen, which frequently has been the case.
In some cases, Reilly Financial has urged the creation of a qualified domestic trust (QDOT). One of our clients, who married a wife from the Philippines, meant to set up a QDOT but never got around to it, Reilly said. Our clients $1.5 million IRA, which went to his widow, was immediately taxable, so she never got the benefit of stretching out distributions.
In recent years, Reilly said, his firm has expanded its presence in the U.S. and now serves 600 clients, at home as well as in 15 foreign countries. Understanding foreign customs, rules, and the way business works in other countries has been a big part of our growth.