Moving across an international border is an exciting new chapter, but it brings with it a unique set of financial challenges. One of the most overlooked—and often frustrating—realities for cross-border movers is that they may have to switch financial advisors. This isn’t just a matter of preference; it’s often a legal and practical necessity.
Why Your Domestic Advisor May No Longer Be the Right Fit
Financial advisors are typically licensed and regulated at the national or state/provincial level, meaning their ability to manage your investments and give tax-optimized advice may not extend beyond their home country. When you cross an international border, your financial situation becomes more complicated, and most domestic-only advisors are simply not equipped to handle the intricacies of cross-border planning.
Here’s why:
1. Licensing and Regulatory Barriers
Advisors are subject to strict licensing rules in both Canada and the U.S. A U.S.-based advisor who isn’t licensed in Canada cannot legally manage your Canadian investment accounts, and vice versa. Even if they are willing to help, doing so without proper licensing could result in serious compliance issues and penalties.
2. Complex Tax Implications
Cross-border tax rules are a minefield. If your advisor isn’t well-versed in the Canada-U.S. Tax Treaty, U.S. citizenship-based taxation, and Canadian departure tax rules, they might inadvertently leave you vulnerable to double taxation or missed planning opportunities.
For example:
- RRSPs: These accounts are tax-deferred in Canada, but must be reported differently in the U.S.
- TFSAs: Tax-free in Canada but taxable in the U.S. if not handled properly.
- 401(k) Plans: Understanding how to transfer or withdraw funds tax-efficiently after moving to Canada is crucial.
Without the right expertise, a domestic advisor could give advice that works in one country but backfires in the other.
3. Investment Restrictions
Many U.S. mutual funds and ETFs aren’t available to Canadian residents, and vice versa. If you keep your old advisor, you might find that your portfolio becomes frozen, with no ability to make changes or reallocate assets. Worse, you might face tax penalties for holding investments that are classified as Passive Foreign Investment Companies (PFICs) under U.S. tax law—often a nasty surprise for Canadians moving to the U.S.
4. Retirement and Social Security Planning Gets More Complicated
Retirement planning looks very different when you live a cross-border lifestyle.
- How do you maximize both CPP/OAS and U.S. Social Security?
- What’s the best strategy for taking withdrawals from your RRSP and 401(k)?
- How does the Social Security Totalization Agreement affect your eligibility for retirement benefits?
A domestic-only advisor might not know the answers—or worse, might give you advice that results in missed benefits or unnecessary taxes.
The Cross-Border Advisor Advantage
Cross-border advisors are specially trained to handle the complexities of living, working, and retiring across two countries. They are familiar with dual tax systems, international treaties, and the intricacies of cross-border investing.
Here’s what a good cross-border advisor offers:
- Licensing in Both Countries – Ensuring they can legally manage your accounts and give you sound advice on both sides of the border.
- Dual Tax Expertise – Minimizing tax exposure while taking advantage of cross-border opportunities.
- Comprehensive Retirement Planning – Coordinating benefits from multiple systems and optimizing withdrawals.
When to Consider Switching Advisors
If you’ve recently moved—or are planning to move—between Canada and the U.S., it’s worth evaluating your current advisor’s capabilities. Ask:
- Are they licensed in both countries?
- Do they understand the tax implications of cross-border living?
- Can they manage your retirement accounts and investment portfolio in both jurisdictions?
If the answer to any of these questions is “no,” it may be time to switch to a cross-border advisor who can offer the expertise you need.
Moving across an international border changes your financial landscape in profound ways. While it may seem inconvenient to switch advisors, it’s often necessary to protect your wealth and ensure your financial plan works seamlessly across borders. The right cross-border advisor can help you navigate these complexities, so you can focus on enjoying your new life.
