Working with non-U.S. citizens

There are two main challenges when dealing with international clients: vetting their financial history and making sure you have a product suite that is appropriate and legal in their country, according to Ricardo Morean, director of International Advisory at RBC. Whereas many advisors focus on winning the trust of their clients, firms bringing on international clients need to have an equally high level of trust in who they bring on board, especially given the Patriot Act and other regulations that place additional red tape on managing foreign money, Morean said. “The main concern is really the trust,” Morean, who deals largely with Latin American clients, added. “We want to make sure we don’t have clients linked to anything with terrorism or money laundering.” RBC’s first line of defense is in the selection process, he explained. The firm takes a targeted and highly specific approach to going after prospects who are well-known in the community and ideally come with a strong referral from an RBC advisor in the country. Then, RBC implements a rigorous Know-Your-Client process that is a more intensive version of suitability requirements. The advisor will work to understand the source of the money going into the account, its final destination and may visit to the prospect’s place of business as well. “We do a very detailed review of the client, objectives and all of that just like any other U.S. clients,” he explained. “In addition we have – and all the financial institutions have – additional procedures because of the Patriot Act and other regulations coming our way.” For those prospects who do become clients, RBC has two product offerings: one for U.S. citizens and one for non-U.S. citizens who may benefit from an off-shore mutual fund or a unique offering based on their location. Many countries have lists of other regions that their citizens may not be allowed to invest in either because of an embargo or because of regulatory concerns, Morean said. Moreover, if clients are looking to get access to U.S. markets, they cannot invest directly in a U.S. mutual fund and have to use one that is rated for investment outside the U.S. in order to access the same stocks. “Sometimes for example there are clients that their countries have jurisdictions in which they are not allowed to do business,” Morean said. “It’s a completely different set of skills for an advisor who deals with U.S. persons versus one who deals with international clients.