Vanguard USA customers - any probs w/ account while Thailand based?

[john_bkk919]

Recently I've been trying to set up a new account with Vanguard USA, while here in Thailand. I'm a US citizen with a US address, etc. The purpose of the account is to buy Vanguard ETFs only.

I told them I'm in Thailand at the moment but maintain a US residence.

At one point the account creation 'concierge' told me that they have a 'foreign account policy'. Hmm - what's that? He couldn't tell me.

He did mention (when pressed) that if I were not in the US for a period of time, Vanguard's 'compliance department' may ask for a utility bill or some such to prove that I am in fact domiciled in the US.

Thing is, this 'domicile' requirement does not seem to be mentioned on any of their forms.

The only requirement they list is that you be a US citizen or 'US person' as defined by the yearly tax return. Well, any US citizen is going to fall under that definition, regardless of where they live or for how long.

The other requirement is that you have a US street address. That's it. It isn't mentioned that you need to be at that address for a specific period of time over the course of any given year, or even that you own the property.

I asked the Vanguard rep if there was something I could read on their website about this 'foreign account policy' and he said 'good question' but wasn't able to offer anything. A vague and evasive conversation.

Anybody have any recent info to share about their experiences having a Vanguard USA account while living in Thailand? Are they expat unfriendly as a rule or is it just a case of some reps not really knowing what they're on about? Has anyone ever been asked for a utility bill a few years down the road or something like that?

Also if you have an account rep you'd like to recommend feel free to PM me.

[CaptHaddock]

Why on earth would you tell Vanguard that you are in Thailand? You have nothing to gain from such a disclosure and much to lose, as you have discovered. If VG decides you are not resident in the US they will freeze your account. They do not always show a lot of interest in your residence, but once their suspicion is aroused they may indeed persist. What you should do is get a mail forwarding service with a street address in a non-income-tax state, a voip phone account with a US voip phone number, and a vpn for your computer that will show a US ip address for you. You should also open lots of brokerage and banking accounts in the US while you are there as backups against a lockout.

VG's interest is in being able to say to foreign governments that they do not solicit or accept business in their jurisdiction, freeing them from onerous reporting requirements. Therefore, they need to demonstrate a good faith effort to avoid doing business in a foreign jurisdiction. Validating suspicious customers, in which group they now count you, is one way to demonstrate such a good faith effort. I used to work in the US financial industry and I know how the managements of such customers view risks like being subject to a foreign regulatory regime. All US brokerages should be regarded as either expat-unfriendly or in danger of becoming expat-unfriendly without warning.

So, when you are back in the States, open an account at Schwab, say, use the facilities I mentioned above and keep your mouth shut.

Edited September 20, 2014 by CaptHaddock

[Suradit69]

I've had brokerage and money market accounts with Vanguard for decades. I use a US account address, but they know I'm in Thailand. Before I went to paperless account reporting, they sent me duplicate quarterly copies of my account transactions here.

I also still have my Thai telephone number as the contact for my brokerage accounts. They have phoned me a couple of times (in the middle of the night in Thailand, thank you very much) and I have often called them collect from Thailand.

Likewise with internet account access. There were some security problems logging in from Thailand for awhile, but that's been resolved. Usually when I sign in there is a third step for answering a pre-set question (the same as would be used for anyone logging in from a computer that their computer didn't "recognize.").

I trade stocks and stock options (too) frequently on-line from my brokerage accounts and I also send money from my money market account to Bangkok Bank in New York (no charge, no problem).

Opening an account from Thailand might be a different matter. I opened my accounts many, many years ago while I was in the US.

Many mutual funds, not just those from Vanguard, will refuse to allow you to buy in with a non-US address.

Edited September 20, 2014 by Suradit69

[Suradit69]

Why on earth would you tell Vanguard that you are in Thailand? You have nothing to gain from such a disclosure and much to lose, as you have discovered. If VG decides you are not resident in the US they will freeze your account. They do not always show a lot of interest in your residence, but once their suspicion is aroused they may indeed persist. What you should do is get a mail forwarding service with a street address in a non-income-tax state, a voip phone account with a US voip phone number, and a vpn for your computer that will show a US ip address for you. You should also open lots of brokerage and banking accounts in the US while you are there as backups against a lockout.

VG's interest is in being able to say to foreign governments that they do not solicit or accept business in their jurisdiction, freeing them from onerous reporting requirements. Therefore, they need to demonstrate a good faith effort to avoid doing business in a foreign jurisdiction. Validating suspicious customers, in which group they now count you, is one way to demonstrate such a good faith effort. I used to work in the US financial industry and I know how the managements of such customers view risks like being subject to a foreign regulatory regime. All US brokerages should be regarded as either expat-unfriendly or in danger of becoming expat-unfriendly without warning.

So, when you are back in the States, open an account at Schwab, say, use the facilities I mentioned above and keep your mouth shut.

" If VG decides you are not resident in the US they will freeze your account. They do not always show a lot of interest in your residence, but once their suspicion is aroused they may indeed persist. "

Can't agree with that. They know I'm in Thailand, have called me on my Thai telephone and accept collect calls at their expense from me in Thailand.

They don't need to know that you are "permanently" resident in Thailand and, as far as I know, US brokers or investment companies don't prohibit their customers from going on holiday outside the US. If you want to vacation in Thailand during the winter (12 months a year it's winter somewhere) what's that to them?

Edited September 20, 2014 by Suradit69

[john_bkk919]

'Why on earth would you tell Vanguard you are in Thailand?'

Because I don't want to deal with a brokerage where that's even an issue. Look, most expats know about VPNs and Florida remailers. It's a personal decision whether you want to live your life like a child that's done something wrong, loaning out your piggy bank as covertly as possible and keeping your mouth shut for fear of repercussions, or if you want to work with organizations that actually want your business. I choose the latter.

My current brokerage doesn't care where I live, never has, and they don't trouble me with trifles - they just want me to maintain a certain balance and have a US street address that actually exists. It's something I discussed with them 5-6 years ago, and I'm glad I did. Their policies have always been clear, which is sort of a prerequisite for parking my money at any broker / bank. I've had them send wires to Thailand or provide documents I needed for certain things. One of the benefits of not skulking around or lying to them is being able to reach out for these kinds of services without fear of 'too much disclosure'.

The US bank where I have a checking account also has no issue with expat customers. In fact, they offer a number of services geared to us which have expanded over the years. Unfortunately, I'm not interested in their investment 'products', but they do offer some. Again, no problem with the fact that I'm in Thailand and have been for some time.

On the flip side, I did bank with an organization years ago that didn't like expat accounts. All of the process flows were set up with the idea that customers could come in to sign papers, get special stamps to transfer certain securities, etc. Better to find out at the outset (like with Vanguard, perhaps) that you're not the kind of customer they want, because they'll keep coming at you with these things and they don't give a hoot about your compliance burden.

Whenever I look for a bank or broker I tell them a few things about myself. It's sort of a litmus test. If the conversation doesn't go well, I know we're not a good match.

Lots of other banks / brokers to choose from IME, all with somewhat different takes on the same regs.

--

I googled around and noticed that others have had a problem getting Vanguard to spell out their 'foreign account policy'. Maybe getting rid of expats is something that all of the big discount brokerages are doing. Too many customers, too much risk of foreign exposure. As I stated in the OP, it's not in the Vanguard fine print that you actually maintain US residency, just that you be a citizen or 'US Person' with a US street address. If residency is a requirement, they should be clear about it. Anything less is dishonest, especially if the idea is to throw a few customers under the bus every year to meet a due diligence quota.

Still would like to hear from people in Thailand who have actual experience with Vanguard or similar outfits like Fidelity and Schwab. Anyone had their account frozen for being an expat or other horror stories to share?

[john_bkk919]

Thanks for your comments, Suradit.

I didn't think the residency requirement applied to things other than mutual funds.

But then the rep started needling me about residency issues. So I asked what the policy actually is, and I got some Kafka-esque responses.

I thought I'd check the paperwork again but there's nothing there.

[CaptHaddock]

John,

You don't live in the world you imagine. You may not want to deal with a brokerage for whom that is an issue, but even if you have a broker who tolerates you as an expat today that provides no guarantee for the future. Case in point. Many expats have accounts with Fidelity, which has long had the reputation of giving a nod and a wink to expats. Then in June, 2014 they sent out a letter to known US expats announcing the freezing of their taxable and IRA accounts beginning August 1, 2014, but not affecting Keogh and other employer-based accounts. Why the action and why the exclusion? No idea. No grandfathering though. Now, if you had a Fidelity IRA and another IRA at some other US broker, you could just do a trustee-to-trustee transfer and you would be fine. If not, you would be truly SOL since you probably will not find a broker who will knowingly open an account for while you live outside the country.

This is why Suradit's report of tolerance by Vanguard doesn't mean anything. Vanguard could do a Fidelity on him at any time. Maybe the Mexican government sent a letter to Fidelity, but not Vanguard, saying we notice you have a lot of customers in Mexico, but you are not registered as a brokerage in Mexico and do not file compliance reports, etc. so please explain why you should not have to pay substantial penalties and interest going back x years for your non-compliance? All of a sudden your expat account with Fidelity looks like a liability exposing the company to losses far beyond the benefit of your meager funds. There is a reason that Vanguard's policy on expat accounts is not clear. If they do clarify it at some point in the future it will be along the lines of Fidelity's June letter. At no point will they ever promise to provide you with brokerage services in the future nor will any of their behavior imply such a promise.

It is worth bearing in mind that we do not have a right to a US brokerage account. We don't have the right not to pay income tax in Thailand. We don't have the right not to be double-taxed by both the US and Thailand, although we can reasonably expect this. We don't have the right to live in Thailand and probably not even the right to live outside the US, although these privileges don't seem to be threatened at the moment. We don't have the right to a bank account in Thailand. There is a whole host of rights that we do not have. We chose to be expats knowing that we would fall through most of the cracks. On the whole, we probably expect to benefit thereby, but that is not assured and can change at any time. So, it seems a bit ridiculous to stamp our feet and insist that we be treated as we were when we were US citizens-in-residence.

The shrewd move is to use the available technology to stay below the radar. If it ever comes to an open argument with entities like brokerages or governments we are unlikely to win. If you wish to insist on what you imagine to be your rights you can go ahead and assume the risks that Suradit is assuming vis-a-vis his Vanguard accounts. If so, you may well be fine. If you do have a problem however, your accounts will probably be frozen or even closed. And then what? And what risk/benefit analysis would persuade you to take such a risk?

'Why on earth would you tell Vanguard you are in Thailand?'

Because I don't want to deal with a brokerage where that's even an issue. Look, most expats know about VPNs and Florida remailers. It's a personal decision whether you want to live your life like a child that's done something wrong, loaning out your piggy bank as covertly as possible and keeping your mouth shut for fear of repercussions, or if you want to work with organizations that actually want your business. I choose the latter.

My current brokerage doesn't care where I live, never has, and they don't trouble me with trifles - they just want me to maintain a certain balance and have a US street address that actually exists. It's something I discussed with them 5-6 years ago, and I'm glad I did. Their policies have always been clear, which is sort of a prerequisite for parking my money at any broker / bank. I've had them send wires to Thailand or provide documents I needed for certain things. One of the benefits of not skulking around or lying to them is being able to reach out for these kinds of services without fear of 'too much disclosure'.

The US bank where I have a checking account also has no issue with expat customers. In fact, they offer a number of services geared to us which have expanded over the years. Unfortunately, I'm not interested in their investment 'products', but they do offer some. Again, no problem with the fact that I'm in Thailand and have been for some time.

On the flip side, I did bank with an organization years ago that didn't like expat accounts. All of the process flows were set up with the idea that customers could come in to sign papers, get special stamps to transfer certain securities, etc. Better to find out at the outset (like with Vanguard, perhaps) that you're not the kind of customer they want, because they'll keep coming at you with these things and they don't give a hoot about your compliance burden.

Whenever I look for a bank or broker I tell them a few things about myself. It's sort of a litmus test. If the conversation doesn't go well, I know we're not a good match.

Lots of other banks / brokers to choose from IME, all with somewhat different takes on the same regs.

--

I googled around and noticed that others have had a problem getting Vanguard to spell out their 'foreign account policy'. Maybe getting rid of expats is something that all of the big discount brokerages are doing. Too many customers, too much risk of foreign exposure. As I stated in the OP, it's not in the Vanguard fine print that you actually maintain US residency, just that you be a citizen or 'US Person' with a US street address. If residency is a requirement, they should be clear about it. Anything less is dishonest, especially if the idea is to throw a few customers under the bus every year to meet a due diligence quota.

Still would like to hear from people in Thailand who have actual experience with Vanguard or similar outfits like Fidelity and Schwab. Anyone had their account frozen for being an expat or other horror stories to share?

[Suradit69]

John,

You don't live in the world you imagine. You may not want to deal with a brokerage for whom that is an issue, but even if you have a broker who tolerates you as an expat today that provides no guarantee for the future. Case in point. Many expats have accounts with Fidelity, which has long had the reputation of giving a nod and a wink to expats. Then in June, 2014 they sent out a letter to known US expats announcing the freezing of their taxable and IRA accounts beginning August 1, 2014, but not affecting Keogh and other employer-based accounts. Why the action and why the exclusion? No idea. No grandfathering though. Now, if you had a Fidelity IRA and another IRA at some other US broker, you could just do a trustee-to-trustee transfer and you would be fine. If not, you would be truly SOL since you probably will not find a broker who will knowingly open an account for while you live outside the country.

This is why Suradit's report of tolerance by Vanguard doesn't mean anything. Vanguard could do a Fidelity on him at any time. Maybe the Mexican government sent a letter to Fidelity, but not Vanguard, saying we notice you have a lot of customers in Mexico, but you are not registered as a brokerage in Mexico and do not file compliance reports, etc. so please explain why you should not have to pay substantial penalties and interest going back x years for your non-compliance? All of a sudden your expat account with Fidelity looks like a liability exposing the company to losses far beyond the benefit of your meager funds. There is a reason that Vanguard's policy on expat accounts is not clear. If they do clarify it at some point in the future it will be along the lines of Fidelity's June letter. At no point will they ever promise to provide you with brokerage services in the future nor will any of their behavior imply such a promise.

It is worth bearing in mind that we do not have a right to a US brokerage account. We don't have the right not to pay income tax in Thailand. We don't have the right not to be double-taxed by both the US and Thailand, although we can reasonably expect this. We don't have the right to live in Thailand and probably not even the right to live outside the US, although these privileges don't seem to be threatened at the moment. We don't have the right to a bank account in Thailand. There is a whole host of rights that we do not have. We chose to be expats knowing that we would fall through most of the cracks. On the whole, we probably expect to benefit thereby, but that is not assured and can change at any time. So, it seems a bit ridiculous to stamp our feet and insist that we be treated as we were when we were US citizens-in-residence.

The shrewd move is to use the available technology to stay below the radar. If it ever comes to an open argument with entities like brokerages or governments we are unlikely to win. If you wish to insist on what you imagine to be your rights you can go ahead and assume the risks that Suradit is assuming vis-a-vis his Vanguard accounts. If so, you may well be fine. If you do have a problem however, your accounts will probably be frozen or even closed. And then what? And what risk/benefit analysis would persuade you to take such a risk?

I googled around and noticed that others have had a problem getting Vanguard to spell out their 'foreign account policy'. Maybe getting rid of expats is something that all of the big discount brokerages are doing. Too many customers, too much risk of foreign exposure. As I stated in the OP, it's not in the Vanguard fine print that you actually maintain US residency, just that you be a citizen or 'US Person' with a US street address. If residency is a requirement, they should be clear about it. Anything less is dishonest, especially if the idea is to throw a few customers under the bus every year to meet a due diligence quota.

Still would like to hear from people in Thailand who have actual experience with Vanguard or similar outfits like Fidelity and Schwab. Anyone had their account frozen for being an expat or other horror stories to share?

"You don't live in the world you imagine."

But possibly you are imagining a world more bleak than it is.

"...even if you have a broker who tolerates you as an expat today that provides no guarantee for the future. "

There are very few guarantees for the future aside from death and taxes. It's prudent to consider what possibilities there are down the line, but being prudent can easily descend into a debilitating fear of the future.

Increasing numbers of Americans at all economic levels are retiring and choosing to spend at least some of their time abroad. Vanguard and other brokers also have an eye on the future. I would venture to say that the demographic most likely to have a substantial investment account is in the upper age brackets, retired or soon to be, and they are also the most likely to travel or spend extended periods of time resident somewhere other than their primary residential address. I doubt Vanguard is looking to build its future business on accounts held by 25 year olds who've never been more than 50 miles from where they were born.

I've never been made to feel that I was being just tolerated by Vanguard. When there were some security issues about Internet access from Thailand to Vanguard accounts, they said they were working on the problem (which was quickly solved) because many of their account holders in Thailand were experiencing difficulty with this. Neither their response to my question nor their quick resolution of the problem made it seem we were merely being tolerated.

It's a bit like the hysteria around Thai banks being unwilling to take on American customers because of the extra FATCA paper work. All the dire predictions came to nothing when virtually every financial institution in Thailand quickly became compliant with the new rules.

Edited September 21, 2014 by Suradit69

[john_bkk919]

Suradit covered everything I would have said in response.

Kind of a personal decision if you want to hide. It’s unlikely to work much longer though, if the doomsday scenario holds true. Real easy to ask for proof of domicile. Then the choice might be really uncomfortable. Liquidate a position at a loss? Tell some porkies on a form?

I don’t feel compelled to adopt a ‘suspect’ mentality just to buy a few ETFs. Don’t need to, have other options. Nothing to do with ‘rights’.

Now if I had an IRA with Vanguard and couldn’t leave Thailand, that might be different. I might do whatever I had to do to protect myself from my own bank. But to opt in to a fear-based relationship at the outset? No way.

They’re not the only game in town, even for their own products.

Different US banks, different issues. I never hear a peep from either of the guys I’m currently with despite all the Banking Act changes in the last dozen years. It’s always a pleasure dealing with them. In contrast, I’ve been with some more mainline banks as a retail customer and you did get the full ‘parole violator’ treatment as an expat. This was true even 15-20 years ago. There was always some new regulatory scheme they referred to justify this behavior, but what it came down to then and now is some banks 'get' expat customers and some don't. Better to figure out which don't, and avoid them.

[choochoo]

i think its the govt coming down on the financial industry-you know to kombat terrorists.

online banks want the same info.

[CaptHaddock]

We are all entitled to make our own decisions, of course, but it seems to me that you are taking unnecessary risks. And you seem to make your decision based on emotions, such as not wanting to feel fear or to feel demeaned as a second-class American because you are abroad or something. Apparently you assume that everyone else also acts out of emotions like fear, but that's not the case. I don't actually feel fear when I get into a car and buckle up the seatbelt. I do it from thinking, not feeling, that is to say, from understanding that doing so reduces my risk and that not doing so, increases my risk, which nevertheless remains small on any particular occasion. In the same way I analyze the risks associated with maintaining brokerages accounts with companies who may suddenly decide at some point in the future that they don't want my business. I don't feel fear in this case and I don't take the actions of a brokerage company as personally demeaning to me. It's more like taking the weather into account when making plans. Generally, financial decisions are better if they are based on cold-calculation rather than hot emotions.

Suradit covered everything I would have said in response.

Kind of a personal decision if you want to hide. It’s unlikely to work much longer though, if the doomsday scenario holds true. Real easy to ask for proof of domicile. Then the choice might be really uncomfortable. Liquidate a position at a loss? Tell some porkies on a form?

I don’t feel compelled to adopt a ‘suspect’ mentality just to buy a few ETFs. Don’t need to, have other options. Nothing to do with ‘rights’.

Now if I had an IRA with Vanguard and couldn’t leave Thailand, that might be different. I might do whatever I had to do to protect myself from my own bank. But to opt in to a fear-based relationship at the outset? No way.

They’re not the only game in town, even for their own products.

Different US banks, different issues. I never hear a peep from either of the guys I’m currently with despite all the Banking Act changes in the last dozen years. It’s always a pleasure dealing with them. In contrast, I’ve been with some more mainline banks as a retail customer and you did get the full ‘parole violator’ treatment as an expat. This was true even 15-20 years ago. There was always some new regulatory scheme they referred to justify this behavior, but what it came down to then and now is some banks 'get' expat customers and some don't. Better to figure out which don't, and avoid them.

[john_bkk919]

Anyway, for those interested, Schwab One Personal International seems to be set up for US expats who want to trade US securities.

Things look similar to a ‘domestic’ Schwab account but you can’t buy mutual funds (ETFs are ok) and there may be a few other wrinkles depending on your use case.

I believe it’s 10k to open an account. So, a bit more than domestic.

The fee schedule for ETF trades looks the same as what I recall seeing on the domestic side.

More here:

http://www.thaivisa.com/forum/topic/646955-schwab-one-personal-international-account/

Edited September 28, 2014 by john_bkk919