Interview with an International Man Wealth Advisor

At its core, International Man is designed to be a community of like-minded people who come together and converse on all topics related to the internationalization process. One member is Steve Abramowicz, a Seattle-based wealth advisor to high net worth individuals across the United States. He has also internationalized himself and his family to a great degree.

A few weeks ago, he generously offered to share some insights into what he does for his clients and his own particular internationalization strategies, which is presented for you below. Let’s jump in…

International Man: How would you summarize what you do for a living?

Steve Abramowicz: I am a wealth advisor for the US division of the world’s largest wealth management firm. I routinely diversify assets, estate plan, and quarterback planning between trustees, CPAs, attorneys and boards. I also tailor make goal oriented financial plans for high net worth individuals and trusts that want asset protection, legacy planning and, of course, growth. The growth is the back of the cocktail napkin stuff that I enjoy, but the real passion for me comes from the problem solving and relationships built from the generational planning and dynasty building.

IM: How did you get into this particular business?

SA: I just turned 40 and have been doing this for almost 20 years. It’s all I’ve ever known.

My family was in real estate in the 60s and early 70s in Napa, California. I figured I’d go into the family business but after I graduated college, I got some advice that said, “If you do what you love for a living, you never work a day in your life.” A friend of mine has suggested I look at Wall Street as they were hiring – it was 1994 and they had had a good rally over the previous 2 years.

I tried it, really liked it and have been doing it ever since.

IM: If a potential client who met your requirements walked through your door today, how would you get started with him?

SA: I’m very goal oriented, so the first thing is to sit down and discuss some of the non-financial aspects of a person’s life – their family situation – kids, elderly parents, siblings that they might have to share a large estate with. We discuss their charitable ambitions and how they want to divide their money when they die. Some people want to set up a charity or foundation to create a legacy – like the Bill and Melinda Gates Foundation.

One of the most important things is to find out what they want to do with their money over their lifetimes. Almost everyone who has 10 million dollars wants $25M, people who have $100,000 would love to get to a million and so on. That’s all fine and good, but it’s more important what they want to do with that liquidity.

Do they want to be Jesse Livermore and sit on their cash like Scrooge McDuck or do they want to use some estate planning tools that can make sure their money does some good? Do they have a child with special needs or kids who aren’t doing so well and need some help? Perhaps they have grandchildren they want to leave something for.

Once I get a handle on all that, then I can help them create a plan of action to help them reach their goals. That means sitting down with my Golden Rolodex and finding the right resources – it could be a domestic or international estate attorney, insurance agent, or just the right accountant. I then quarterback the process.

Sometimes it’s as simple as someone just wanting to grow their money. I can do that. I do it every day. But if it’s more sophisticated and they want, say, creditor protection, leverage, wealth or dynasty planning, we can do that too – both domestically and internationally.

IM: How many clients do you currently work with internationally versus domestically?

SA: It seems everybody that comes in nowadays is either in the process of internationalization or at least thinking carefully about it. People see that something is wrong in the US and they want to protect themselves. They know it’s something they should do.

I’d say in the next few years, 90% of my clients will be fully internationalized. Currently about 5% would fall into this category. But it’s growing fast.

That’s where UBS, the bank I work for, is so important. Every financial service one could need is there. It’s a complete menu. There are other qualified options out there of course, but I like UBS because it offers so much in one package – from international stocks to gold storage in Zurich to your basic everyday chequing account.

IM: Speaking of UBS, when the bank had to give out all the American account names and numbers, how did that affect your business if at all?

SA: It didn’t affect it at all. The question you just asked was the headline from the media, not the reality. In reality, we were required to give up just over 50,000 names of our 450,000 American clients. So about 11%. Of that, UBS actually only handed over 4,000 names.

The bottom line is so long as you always do your reporting, this is not an issue. Over the centuries, Switzerland and the Bahamas and the Cayman Islands and a lot of other places have become places to hide your money. If you’re a Middle Eastern dictator and you want to hide the billions you’re stealing from your people, it can be done in the world. But it’s a lot harder than it used to be because those places that haven’t complied with modern reporting requirements have been squeezed.

So if you’re a US citizen and you want to internationalize your assets, you have to do it right. If you cheat, you’re probably going to get caught and it’ll be expensive. You might even go to jail.

If you want to play by the rules and internationalize your finances the right way, you need to learn how to do it right or find someone like me who will ensure you do everything properly.

Everything comes down to form 1099. If you buy gold in Switzerland and then sell it and take a profit, you need to report it because the bank will be reporting it to the IRS as well. If you buy international assets in foreign currency and you take profits, it’s going to be recorded. So ensure you report everything because those records could come back to get you if you don’t follow the rules.

The good news is, UBS actually does the tax reporting for you. Other banks will too [another Swiss bank that offers the service is Credit Suisse], but most will not – they don’t want the responsibility to keep track of all that. In fact, most offshore banks won’t even have Americans as customers for this reason – they don’t want the extra paperwork.

It used to be that you could walk around the streets of Geneva or Zurich with a passport and just open a chequing account. Americans can still do that in Canada, New Zealand and Australia but not in Switzerland. There are ways around that but generally, they don’t want American clients for the reporting requirements.

IM: What kind of person is able to take full advantage of wealth advisors like you?

SA: $500K to $1Million dollar liquid net worth is ideal. For the first time, for this year and next, the tax exemption is $5M per person or $10M per couple, so it raises the bar on exactly what sort of client needs this sort of service.

I should mention that there are no up-front fees to use my services. But the implementation through lawyers, accountants and other professionals is what will cost some money.

IM: How have you internationalized yourself from an investment point of view?

SA: I was in New Zealand and so opened up a bank account and wired funds in, held in my name in New Zealand dollars. I put those into short term deposits because they have better interest rates than US rates and I roll them over as needed. But I keep it flexible enough to move them around as needed. That was the first step.

Because I live so close to Canada, the next thing I did was drive up across the border, walk into a Royal Bank of Canada branch and set up an account in Canadian funds. Every once in a while, I write a cheque with the account number on it and drop it in the mail to the bank.

Some time later, I discovered a Belize bank called Caye International. I was able to buy foreign currency through them and so I chose Swiss Francs. Apparently, even though the company is based in the Caribbean, their backoffice banking is in Zurich, so I didn’t incur any currency conversion costs – it was already in Swiss francs.

I’ve also purchased some Perth Mint certificates, which is an easy way to benefit from the precious metals book while having the certificates guaranteed by the Australian government.

I buy and store gold with Border Gold just over the border in Surrey [BC, Canada]. I’m also thinking of buying a storage container up there, but I haven’t done it yet.

I’ve also purchased a large piece of property in Argentina that I intend to build on, owned by an international corporation and held by an international trust to insulate that property as well as to protect it from creditors. That was a big deal.

Oh… and I also tried to buy a Bed & Breakfast in New Zealand, but the deal fell through. I really like the potential future of New Zealand and am still looking.

And all together, the trust owns everything.

IM: So you set up the trust and made yourself a beneficiary?

SA: I’m actually not the beneficiary, my kids are. If you make yourself a beneficiary, the IRS can say that what you did wasn’t truly a gift and it comes back into the estate. If you make your kids a beneficiary, it’s harder for them to make that claim.

IM: Do you invest your Canadian dollars in term deposits?

SA: No, there’s no point as interest rates are nothing. The Canadian dollar is basically just a play on oil and as oil is rising, so too is the Canadian dollar. The Swiss franc is a straight currency play as well. The New Zealand dollars are there because they offer a decent interest rate.

IM: Taking out the complexities of an international trust, how difficult is it for someone to follow the path you’ve laid out?

SA: It’s actually very easy. The trust is there for asset protection and there’s a case to be made for that. If you rear-end someone and they come after the assets you’ve spent time building up, do you want them to get it? The trust protects you from that eventuality.

However, getting the basics set up is a relatively straight forward thing.

It’s easier than ever to diversify out of the US dollar. Some people are scared that capital controls will be brought in and that freedom will be taken away. It’s possible and that’s why it’s important to act now.

IM: Do you plan on staying in Seattle or expatriating at some point?

SA: I’ve got the Cafayate [Argentina] property as a home away from home but am also looking at a third property in New Zealand. But I don’t know. I’m not sure what would have to happen to push me out the door and relocate my family permanently. My main priority right now is to give myself the freedom to make that choice should the time come.

IM: If you were just getting started and looking to establish a financial flag outside your country, where would you start?

SA: The first step is to go to some place you like and open a bank account. I liked New Zealand, so I went there.

Second step: Diversify that by purchasing different currencies either through the bank account you just set up or through other bank accounts in other places. Ideally, the more banks you have, the better.

Third: Buy some gold either through a company like Border Gold or other reputable dealer. This will be your hedge against inflation.

Fourth: Purchase a few Perth Mint certificates through a certified dealer. It’s about as safe as a CD but allows you to play on the rising market in precious metals.

IM: Well, that completes our interview. Thank you Steve for sharing your experience with us today.

SA: You’re welcome.

Tags: taxes, switzerland, offshore banking, gold, estate planning, argentina,