Brussels-based advisory firm Dunhill Financial has teamed up with platform provider Praemium to provide investment models that are built solely with US investments and aimed at American expats.
The partnership will see the investment portfolios of Securities and Exchange Commission-licensed (SEC) Dunhill Financial offered to US citizens in Europe via Praemium’s platform and custody services.
The portfolios will only be offered via financial advisers.
American issues
US citizens living overseas have been under fire for years, mostly as a result of the Foreign Account Tax Compliance Act (Fatca).
But there are other issues that make it very challenging for them to invest.
Complexities with 1099 reporting, which informs the Internal Revenue Service (IRS) of miscellaneous payments, such as income from interest and dividends; plus reporting foreign bank and financial accounts (FBAR) and the ownership of shares in passive foreign investment companies (PFIC) are just some of the hurdles people have to overcome.
Solving the problem
Brian Dunhill, founder of Dunhill Financial, told International Adviser that the intention was “to partner with a company that could trade on large scales at low prices, allowing us to bring the minimum down to the lowest point possible”.
The minimum investment is €25,000 (£21,375, $28,344), which Dunhill believes means “doors can be opened to an under-advised segment of the investment market”.
The portfolios will be composed of approved investments that are registered in the US, which will prevent them from being categorised as PFICs.
Praemium is then able to issue a 1099 at the end of the year, which takes care of the IRS reporting requirements.
Barry Honeyman, Praemium regional sales manager, told IA: “Our US service is one of several unique features of Praemium’s platform offering.
“Our status as a qualified intermediary with the IRS, coupled with our powerful reporting functionality, takes what was a very complicated area of financial services (US tax reporting) and simplifies it immensely.”
Dunhill added: “It’s just as if they had an account back in the states, but they are investing in the currency of where they will be retiring.”
Europe and beyond
The initial range offers three models; moderate, moderate growth and growth, but there are plans to offer up to seven across multiple currencies.
All of the portfolios have a euro-centric allocation, which, “is crucial for American expats who plan to retire in Europe, as it will reduce currency risk through natural hedging”, Dunhill said.
The initial rollout will focus on a European portfolio, but there are plans to expand this in future.
