My USA Fidelity Brokerage Account

[hhgz]

I had a similar situation with Charles Schwab. My broker and financial advisor hid the fact that I did not live in the US for several years. Unfortunate, an audit of their systems indicated that I lived in Thailand. Surreptitiously, my advisor provided info to my broker, who forwarded it on to me. It worked out OK.

As you probably realized, virtually phone calls are recorded. You can ask your broker to call you back on an unrecorded line, and discuss your options.

Edited August 8, 2015 by hhgz

[DrDave]

I also received the email from Fidelity.

I took it to mean that account holders that reside outside of the US would no longer have their cash balances insured by the FDIC. Some brokerages in the US will spread their customers' cash balances among a group of FDIC insured banks in order to guarantee FDIC coverage for 100% of a customer's balance. It appears from the email, that Fidelity will stop doing this for their "foreign resident" account holders, and instead hold the cash balances in-house, which may (or may not) be FDIC insured.

I don't know how Fidelity determines that an account holder resides outside of the US. My personal advisor at Fidelity knows that I live in Thailand, but indicated that it would be no problem last year when I spoke with him. Note that I maintain a US address, and that's the address of record for Fidelity.

I'll be back in the US next month for a visit, and I'm planning on meeting with my advisor at Fidelity to open a new account, and discuss any potential issues relative to residing outside the US.

[Misty]

....

Finally, it should also be noted that in many cases the best solution for Americans abroad is simply to keep their address of record in the U.S. Any American living abroad, even for an extended period, is well within their rights to use a U.S. address for the sake of opening accounts and receiving mail. In this case, there will be no restrictions on the account.

Rather unfortunately the online article you quoted contains some incorrect assumptions such as in the section I've quoted above. Having consulted legal advice on this point, we learned that unfortunately a US financial institution is well within its rights to refuse service to a non-US citizen.

No matter what mailing address a US citizen uses or wants to use on an account, if the US financial institution has rules against working with non-US residents and they have reason to think someone is a non-US resident (as in they live overseas), they can refuse service or close an existing account.

I know this is totally unfair, but unfortunately it seems to be the state of play. The concern US brokers have is that they do not want to break international regulations that prohibit the selling of US domiciled mutual funds across borders.

Luckily there are some US brokers that have set themselves up to segregate US and non-US residents. These continue to work with US expatriates, no matter what address they list on the account.

[alocacoc]

....

Finally, it should also be noted that in many cases the best solution for Americans abroad is simply to keep their address of record in the U.S. Any American living abroad, even for an extended period, is well within their rights to use a U.S. address for the sake of opening accounts and receiving mail. In this case, there will be no restrictions on the account.

The concern US brokers have is that they do not want to break international regulations that prohibit the selling of US domiciled mutual funds across borders.

Thanks for your reply. I hope we will hear also from Jingthing.

So, it's about US domiciled mutual funds across borders? I personally don't have any intention to hold such mutual funds. Why then the brokers don't just block this kind of investment? Due some legal issues i can't trade in Forex with my US Broker. But this is no problem for me. Stocks, Futures and Options are available.

I'm sorry for all the US Expats who faces all these probs. I hope they let me do my business further. Just to have a backup plan, i will later this year open an account at IB.

[TallGuyJohninBKK]

I don't know if it makes a difference, but I use a relative's address in the US as my address of record for all of my US banking and brokerage accounts. All accounts are setup for paperless delivery, so no mail is ever received at this address.

How about when the time comes for your bank or brokerage to renew your ATM/debit cards associated with those accounts?

The cards don't travel very well via email.

[Misty]

....

Finally, it should also be noted that in many cases the best solution for Americans abroad is simply to keep their address of record in the U.S. Any American living abroad, even for an extended period, is well within their rights to use a U.S. address for the sake of opening accounts and receiving mail. In this case, there will be no restrictions on the account.

The concern US brokers have is that they do not want to break international regulations that prohibit the selling of US domiciled mutual funds across borders.

Why then the brokers don't just block this kind of investment?

Some have, and segregate non-US residents from US residents. Those brokers generally aren't shutting accounts on US expats. IB doesn't offer mutual funds on its platform, so it has no problems. If your existing broker is set up for non-US residents, you should be fine with it as well.

Yes, I'd like to see what the specifics are regarding new account regulations that Fidelity is instituting in October.

[TallGuyJohninBKK]

Customers Residing Outside the United States

A new section of the Agreement entitled "Residing Outside the United States" provides details on Fidelity's existing policies for customers that Fidelity determines reside in another country.

These changes become effective on October 9, 2015 (the "Effective Date"), provided, however, that existing customers may be afforded a grace period prior to implementation.

I'm not sure what all that from Fidelity means, either, at this point. I'm not one of their account holders. But I do know one thing.

Over the years, I've probably posted this message at least a 100 times here on ThaiVisa:

There simply is no advantage or reason, and potentially a lot of headache as the OP here found out, in informing your U.S. bank or brokerage that you're living/residing outside the U.S.

Some people get away with it for years, and have already posted here saying so. But others, just like the OP and many others like him, at some point run into hassles and headaches that they simply don't need or want. So the solution is: DON'T DO IT!!!

Live your life here as a U.S. resident when it comes to dealing with U.S. banks and brokerages. Use a U.S. mailing address of record for your accounts. Keep and use a U.S. phone number of record as well. And preferably, when you go to do online banking, use a VPN connection with a U.S. server location.

Do those things, and you can expect with pretty much certainty, that you'll never be posting a ThaiVisa thread like the OP had to do here.

BTW, as regards Schwab, they actually have two different classes of accounts -- one for regular domestic U.S. customers, and the other for international customers. There are varying differences, including with Schwab a much higher initial account opening balance if the account is classified as international. Also, last time I checked, with their international accounts, I don't believe you can trade in U.S. mutual funds through their international account.

I don't know if any of the other major brokerages do the same, though I have never heard of any others among the biggies (Fidelity, Vanguard, E-Trade, etc) that do. At any rate, even for a U.S. citizen living full-time in Thailand, if you approach it and handle it in the right way, there's no reason that person shouldn't be able to maintain and use a regular domestic U.S. account with them.

[DrDave]

I don't know if it makes a difference, but I use a relative's address in the US as my address of record for all of my US banking and brokerage accounts. All accounts are setup for paperless delivery, so no mail is ever received at this address.

How about when the time comes for your bank or brokerage to renew your ATM/debit cards associated with those accounts?

The cards don't travel very well via email.

I don't have/use ATM or debit cards for these accounts. I transfer funds from these accounts to my Thai bank via wire transfer or EFT.

[hhgz]

"BTW, as regards Schwab, they actually have two different classes of accounts -- one for regular domestic U.S. customers, and the other for international customers. "

That's true. I believe that the nearest international Schwab office is in HK, and you'll be subject to the laws and taxes of HK. US customers domiciled outside of the US - according to new financial regulations - cannot receive investment advice from the US. Accordingly, you can either manage your investments form overseas, or speak with a broker as I suggested. Good luck!

[Mike45]

I don't know if it makes a difference, but I use a relative's address in the US as my address of record for all of my US banking and brokerage accounts. All accounts are setup for paperless delivery, so no mail is ever received at this address.

How about when the time comes for your bank or brokerage to renew your ATM/debit cards associated with those accounts?

The cards don't travel very well via email.

I don't have/use ATM or debit cards for these accounts. I transfer funds from these accounts to my Thai bank via wire transfer or EFT.

I value my Scwab ATM card a great deal. I wouldn't want to have to give that up

[Misty]

"BTW, as regards Schwab, they actually have two different classes of accounts -- one for regular domestic U.S. customers, and the other for international customers. "

That's true. I believe that the nearest international Schwab office is in HK, and you'll be subject to the laws and taxes of HK. US customers domiciled outside of the US - according to new financial regulations - cannot receive investment advice from the US. Accordingly, you can either manage your investments form overseas, or speak with a broker as I suggested. Good luck!

Actually, a US citizen who is resident in Thailand and opens a "Schwab International" (sometimes called "Schwab Global") account would not have a Schwab International account based in HK (unless you specifically choose to open one with Schwab HK). If you open it with the Schwab International team based in San Francisco, the account is still US domiciled. HK taxes would not apply. US income taxes would apply but Thai taxes would not unless you move earnings from the account into Thailand in the year you earn them.

What new financial regulations are you refering to regarding US customers outside the US not being able to receive investment advice from the US? I hadn't heard that before and it would be interesting to know specifics.

[TallGuyJohninBKK]

Ya, I never said anything about Schwab HK. That was the other poster here.

But, that aside, there are real differences between the regular domestic Schwab accounts and the international ones. Just go to the Schwab website without a U.S. IP address and if you click to open new accounts, it will automatically take you to their international/global site.

As I mentioned above, one difference from the last time I looked there was there being a $10K minimum to open a Schwab international account, whereas the domestic U.S. Schwab accounts generally have no minimum opening deposit required. There are other differences as well including what kinds of investment products are and are not available to their international account clients.

[Rocketsurgeon]

I recd the same email. Honestly, I don't understand it, so broad and vague. F.ing Fidelity.

I think the US govt is actively engaged in driving us all back to the states. It is going to make impossible or at least miserable to live abroad in relation to finances.

Boomers are coming of age and if they up and leave to distant shores, it shrinks the tax base. Govt is looking under every rock and pick every pocket it can for revenue.

I won't be suprised to find the IRS going after persons abroad making honest mistakes on their taxes just to ratchet up paranoia and misery.

Look for cash to disappear in US and EU.

The future is here. You are nothing more than a wage slave and tax donkey.

Many of you older guys, those with health issues may capitulate first.

If you want to remain free, start looking to homestead. All the bs banking paperwork was the first, then this. Next will be aimed at wiring abroad. Finally, cadh money taken abroad declared. Then limits period. Not to mention fbi is notified on w/ds +2-3k now anyway.

You will be able to earn abroad and spend that monry as you see fit, only curtailed by the draconian pressures put in place by US govt. Its the asset hemorrhage from US they are aiming at.

[Misty]

Ya, I never said anything about Schwab HK. That was the other poster here.

But, that aside, there are real differences between the regular domestic Schwab accounts and the international ones. Just go to the Schwab website without a U.S. IP address and if you click to open new accounts, it will automatically take you to their international/global site.

As I mentioned above, one difference from the last time I looked there was there being a $10K minimum to open a Schwab international account, whereas the domestic U.S. Schwab accounts generally have no minimum opening deposit required. There are other differences as well including what kinds of investment products are and are not available to their international account clients.

Yes, I think I quoted the other poster on Schwab HK...

Over the years I've converted several Schwab domestic accounts to Schwab International accounts. For how I invest, functionally there's almost no difference between the two. Obviously you cannot purchase US domiciled mutual funds with a Schwab International account, but that wasn't an issue for me. For cash holdings, you cannot use one of the money market sweep accounts (these are mutual funds), but Schwab International has other USD cash sweep options that work well.

[Carmine6]

[snip]

What new financial regulations are you refering to regarding US customers outside the US not being able to receive investment advice from the US? I hadn't heard that before and it would be interesting to know specifics.

Not to say that there's not some new law coming because maybe there is, but appears some of this might be internal counsel for companies getting more skittish. Post 21 has a link to an article. Reposted below. From that article:

http://www.international-adviser.com/news/1004914/us-institutions-expats-retirement

...though he thinks that in addition to the KYC (know your customer) rules, institutions are also being spooked by requirements that they need be regulated to provide advice in the jurisdictions in which their retirement account clients live, which few are.

"Over the years I have seen a number of senior US compliance officers making decisions to close accounts for non-US residents because of the ‘advice’ issue," Sellon said

...

Birkenfeld's prosecution, Matthews explained, shone a spotlight on how governments increasingly are viewing locally-unregulated outsiders giving advice – or apearing to – to their citizens. "What's happened is that the US companies have decided the reputational risk [of having expat American clients without providing them with regulated advice in the jurisdictions in which they now live] isn't worth it,"

[Ketchup]

For those of you that use a US address for your investment and banking accounts, please be careful when you try and use a CMRA (Commercial Mail Receiving Agency) mailbox like those from The UPS Store and many others. Not all addresses are created equal.

The financial institutions have postal databases that instantly know if your address is an actual residence or a commercial mail drop. I have found that once you establish a relationship with a company they are generally fine if you later on change your address to a CMRA. They may request that you confirm with them your actual residence address, however.

But when trying to establish a new account with a company, especially Fidelity or Bank of America, I recommend that you only give them a real residential address of a friend or relative that you trust. Financial companies have to comply with Federal "Know Your Customer" regulations that require them to verify where you live. Many companies will not open a new account based solely on a PO Box or CMRA address.

If they question you about it, you can give them a residential address later, but they might demand proof that you actually live there. If you can't supply it, you are screwed and they will refuse to open the account. Many small banks don't care so much, but investment firms and the BoA care a lot.

In my experience, the best strategy is to give them a valid residential address right from the outset. Unless they have some reason to be suspicious, they will accept it without question. Then, after some time has passed, you can change your mailing address to a CMRA while maintaining your friend's address as your "residence" of record.

[TallGuyJohninBKK]

I've run into this issue a number of times myself when opening new financial accounts. But, of all the new accounts I've opened over the years, it's probably only happened a couple of times, more the exception than the rule. That is, the financial institution balking at opening a new account by answering back saying the address on the application shows up as a "commercial" instead of residential one.

The flip side of the issue, of course, is financial account applications also generally ask for a driver's license number (though some also allow a passport number as an alternative). So, if you give them a DL number and then a residential address (such as a friend or family member's) that doesn't match your DL address, I don't know if that's going to create the same kind of verification problem. In my case, I've always used my DL that matches with my mailing address.

In cases where the institution flags your application, they'll often ask for some other piece of documentation such as a utility bill (water, electric, cable TV, etc.) showing your name and address, which they of course will require that it must match the address on your application. If you're using a friend or family member's address, that's obviously not going to work either.

In contrast, I've never had any mailing address problem for any of my already existing financial accounts. It's only the new account opening process where the "commercial" mailing address glitch tends to sometimes arise.

[hawker9000]

For those of you that use a US address for your investment and banking accounts, please be careful when you try and use a CMRA (Commercial Mail Receiving Agency) mailbox like those from The UPS Store and many others. Not all addresses are created equal.

The financial institutions have postal databases that instantly know if your address is an actual residence or a commercial mail drop. I have found that once you establish a relationship with a company they are generally fine if you later on change your address to a CMRA. They may request that you confirm with them your actual residence address, however.

But when trying to establish a new account with a company, especially Fidelity or Bank of America, I recommend that you only give them a real residential address of a friend or relative that you trust. Financial companies have to comply with Federal "Know Your Customer" regulations that require them to verify where you live. Many companies will not open a new account based solely on a PO Box or CMRA address.

If they question you about it, you can give them a residential address later, but they might demand proof that you actually live there. If you can't supply it, you are screwed and they will refuse to open the account. Many small banks don't care so much, but investment firms and the BoA care a lot.

In my experience, the best strategy is to give them a valid residential address right from the outset. Unless they have some reason to be suspicious, they will accept it without question. Then, after some time has passed, you can change your mailing address to a CMRA while maintaining your friend's address as your "residence" of record.

This might be considered timely. I got a form letter just the other day from Fidelity informing me about the different treatment of and account options available to account holders not actually living in the U.S. It appeared to me they were shotgunning all their account holders with this info. They definitely seem to be exercising some kind of due diligence about determining who's actually a U.S. resident and who's not.

[bangmai]

For those of you that use a US address for your investment and banking accounts, please be careful when you try and use a CMRA (Commercial Mail Receiving Agency) mailbox like those from The UPS Store and many others. Not all addresses are created equal.

The financial institutions have postal databases that instantly know if your address is an actual residence or a commercial mail drop. I have found that once you establish a relationship with a company they are generally fine if you later on change your address to a CMRA. They may request that you confirm with them your actual residence address, however.

But when trying to establish a new account with a company, especially Fidelity or Bank of America, I recommend that you only give them a real residential address of a friend or relative that you trust. Financial companies have to comply with Federal "Know Your Customer" regulations that require them to verify where you live. Many companies will not open a new account based solely on a PO Box or CMRA address.

If they question you about it, you can give them a residential address later, but they might demand proof that you actually live there. If you can't supply it, you are screwed and they will refuse to open the account. Many small banks don't care so much, but investment firms and the BoA care a lot.

In my experience, the best strategy is to give them a valid residential address right from the outset. Unless they have some reason to be suspicious, they will accept it without question. Then, after some time has passed, you can change your mailing address to a CMRA while maintaining your friend's address as your "residence" of record.

This might be considered timely. I got a form letter just the other day from Fidelity informing me about the different treatment of and account options available to account holders not actually living in the U.S. It appeared to me they were shotgunning all their account holders with this info. They definitely seem to be exercising some kind of due diligence about determining who's actually a U.S. resident and who's not.

and it was poorly written, too. I almost called and asked what does it mean, but I think it is just about how they handle the proceeds of sales. I was trading this week, as normal. Last year, Sharebuilder, pulled the plug on me, when they determined I was living abroad, but by their own admission, it was one idiots misinterpretation of the rules. They just don't want to get sued if you get in trouble for trading, where you aren't suppose to be, or you are in a place, where you can't access your account. They transferred all my shares free of charge. OTOH, Fidelity has seemed to know all along I am an international customer, so I was a little surprised by the form letter. I do maintain a residential address in the US. At one USD more per trade, than the competition, they really shouldn't push their luck.

[gk10002000]

So you work hard and invest with Fidelity for years or decades. Then you now have the means to travel, live or move anywhere you want. Being a US citizen you are still subject to IRS rules and other US tax laws. But now Fidelity is going to severely limit what you can or can't do? Madness. Time to vote with your "feet" as they say and move stuff elsewhere. Of course that is not trivial. Selling can invoke capital gains or losses, transferring and rolling over to other agencies can be a real pain. I will be looking at this closely in the next few years and see what institution I will stay with or move to. I currently use Etrade and Wells Fargo. I believe Schwab will be fine, but not 100% of all the details.

[hawker9000]

So you work hard and invest with Fidelity for years or decades. Then you now have the means to travel, live or move anywhere you want. Being a US citizen you are still subject to IRS rules and other US tax laws. But now Fidelity is going to severely limit what you can or can't do? Madness. Time to vote with your "feet" as they say and move stuff elsewhere. Of course that is not trivial. Selling can invoke capital gains or losses, transferring and rolling over to other agencies can be a real pain. I will be looking at this closely in the next few years and see what institution I will stay with or move to. I currently use Etrade and Wells Fargo. I believe Schwab will be fine, but not 100% of all the details.

"Then you now have the means to travel, live or move anywhere you want."

'Not sure how it affects those who just travel, even frequently, outside the U.S.; only those residing outside the U.S. (or Canada).

I abandoned Etrade years ago when I started getting letters about "non-activity" even when I actually WAS active. The letters didn't stop so my use of Etrade did. As far as Fidelity is concerned, I've had no problems with the occasional wire transfer to Thailand, nothing in this form letter suggests that's going to change, and that's all I really care about.

[bangmai]

For your reading enjoyment....from (In)Fidelity. Look at page 3. It seems like as long as your sales are swept into a taxable interest bearing account; you are fine. Takes effect 9 October. Probably will be a wave of this type Shiite going around, same as FBAR and filling out IRS forms at Thai Banks. Fidelity-Account-Customer-Agreement.pdf

[Ketchup]

Fidelity screwed me over when I tried to open an account so that I could participate in an IPO, maybe the same one mentioned earlier on this thread. I'm not currently an expat but I have been one in the past. My problems stem from being a domestic vagabond and I don't really have a permanent home. I believe that the corporate policies necessary to comply with the ever more intrusive U.S. laws are subject to a range of interpretations, and Fidelity has chosen to be the most strict.

Ultimately it was my own fault for trying to open an account with the CMRA address that I use for my many, many other financial accounts. I should have predicted the consequences, but Fidelity was extremely uncooperative.

Again, if you already have a good relationship with a company, they are generally fine with using a CMRA as a mailing address later on. I suspect that no investment company will open a new account with only a CMRA address; they will all demand that you provide a residence address as well. The difference lies in what happens after that, and how much proof they require to show you actually live there.

If I was in a position where I was planning to go nomadic but still had a fixed residence, I would open a broad array of accounts in advance to establish the relationships, then change my mailing address later.

Maintaining an existing relationship is far easier than starting a new one after you are "on the road."

[partington]

In the Fidelity website full account of the new terms and conditions it also says that for some countries Fidelity can impose further restrictions on your account up to and including complete restrictions on any trades except liquidating your holdings.

https://www.fidelity.com/customer-service/updated-customer-agreements?ccsource=vn_2015Agreements

"In addition to the foregoing, depending on where you reside, you may be
subject to additional restrictions (for example, margin lending or options
trading may not be permitted) up to and including restrictions that will
prevent you from making additional deposits or purchasing additional
securities positions (i.e., you will be prohibited from doing anything in
your account other than selling your existing holdings and withdrawing the proceeds"

That is quite a big restriction, but they give no details about which countries or clients this applies to and when or if it will be applied!

[bangmai]

that's what Sharebuilder did to me, but admitted it was a misinterpretation of their poorly written rules. Perhaps, it is meant for countries like N. Korea and formerly Myanmar and Cuba.