Hertfordshire-headquartered advice company Headway Wealth has set up a US business via the Beacon Global Advisor Network.
This is part one of its US plan, which also features offering advice services for American expats in Britain.
Hamzah Shalchi, director of Headway Wealth (formerly Shalchi and Partners), told International Adviser: “Being able to look after expats in America is one part of our plan, so we’ve set up Headway Wealth US.
“We found by getting the licence with Beacon, it helps us tick a few more boxes and take advantage of all the needs of the clients as opposed to having to pass them to different entities.
“There’s a couple of advisers at the company that are actually in the process of taking their Series 65 exams.”
According to the BBC, there are 1.3 million British expats living across the US and Canada.
There are only a handful of companies that offer services to UK expats across the Atlantic, which is why Shalchi believes that the US operation is a “massive opportunity” for the business.
“I think there’s more British expats in the US than any other country in the world,” he added. “It’s not an easy marketplace to deal in because it’s very strict and tight on regulation. There’s a hell of a lot more admin that goes into dealing with these clients.
“The time zones can also be a hindrance. Dealing with clients in US time zones isn’t easy for a lot of international companies that are based in Europe or the Middle East. But because we’re predominately based in the UK, it’s quite easy for us to deal with those clients in the US. We just have to deal with them from around 3pm onwards.
“People go to the US and live there for longer periods than places like the Middle East. You can link lifestyles in the UK to most parts of the US, they’re quite similar.”
US expats in Britain
Headway Wealth is not only looking at offering services for UK expats. The company is also now serving US expats in Britain.
However, American expats are sometimes seen as ‘difficult’ due to the complications of the US Foreign Account Tax Compliance Act (Fatca) and the fact that the US has a citizenship-based taxation system.
The US is one of two countries in the world together with Eritrea to have a citizenship-based taxation model, which means that American citizens have to pay tax in the US regardless of where they reside.
Shalchi, who previously worked at Guardian Wealth Management (now Skybound Wealth Management), said: “Historically overseas, I worked a lot with Americans on US offerings. Praemium, Vestra and a couple of other providers have offerings for US nationals living in the UK.
“It’s something that people seem to turn away from a lot. I’ve done quite a bit of work with people in the UK, who are US passport holders, doing pension transfers or just general investments.
“I’ve had a lot of IFAs introduce clients to me because, for one reason or another, they just won’t deal with anybody that has a US passport. They just don’t seem to know what the solutions are. But to be honest, they are quite straightforward as clients.
“But because we work very closely with Vestra and Praemium, and they’re part of our central investment propositions, it is simple and straightforward for us to deal with those clients. It is all about working with companies that understand the rules, specialise in US underlying investments and know a client can actually hold and can’t hold.”
The advice company offered a range of advice services in the UK-based clients and across the globe before its US operation, so it must be looking to hire more advisers due to the increased workload?
Shalchi said: “We will be hiring more people, but not necessarily to be able to give advice in different jurisdictions. I think the fact that we’re UK level 4 qualified adds credibility to all of our clients across the world.
“We are also looking at setting up appointed representatives (AR). We’ve just agreed to do an AR with somebody from the overseas market who wanted to be registered in the UK because they’ve got loads of clients moving back to Britain.
“The fact that we specialise in working with expats and have worked with them for so long, overseas advisory firms are starting to come to us and ask to become appointed representatives of our business.”
Shalchi is looking to grow the company, however it will be more organic growth than acquisitive.
But the firm does have some acquisition ambitions.
Shalchi said: “I’ve been offered a number of times backing to grow via a fast acquisition strategy. I’d like to see the business grow organically and recruit five advisers across the course of the next 12 months.
“In the next four or five years, I’d like to think we’d be at a stage where we’ve got £300m ($406m, €359m) assets under management and potentially maybe acquired a company. We looked at buying a very small business recently, but you just can’t compete with the consolidators in the industry.
“I’d really like to have a presence somewhere in the Middle East. But It’s just weighing up the pros and cons. I used to be on a plane every couple of weeks, travelling is not really an option at the moment.
“I don’t think we need to be going in new jurisdictions, Dubai is an expensive place to have offices and it is hard to justify going there and giving UK style advice. Maybe, we’ll look at an acquisition of a small business in the UAE or something along those lines. At the moment, I certainly wouldn’t be starting afresh in the Middle East right now.”
“I hope we’ll actually have a physical presence in America in the next three to four years, and I think we’ll have an office of three or four people out there as well. That is much more important than us going to say somewhere like the Middle East or other jurisdictions. I think the US is the main one for us is to build on that and build on the UK.”