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2 Key Financial Steps to Take Before Living Overseas

Making a big move abroad? Boxes and masking tape aren't the only essentials. Consider the following steps to organize and adjust one's finances before becoming an expatriate.  

1. Open a Bank Account in the Host Country

Expatriates who are funding their lifestyles from cash reserves in U.S. dollars risk losing purchasing power as a result of currency fluctuation, says Andrew Fisher, CFA, CPA and president of Maxim Global Wealth Advisors, an independent wealth management firm based in Portland, Ore.

To defend against the risk of currency swings, Fisher suggests that expats send money overseas and convert currency that will cover between six months to two years of their cash needs. Using a multi-currency account, which is becoming more readily available in the U.S., also makes it easy to send and receive online wire transfers in a foreign currency.

A cross-border financial advisor should serve as the “quarterback” of the team.

Learn More About Using Online FX

Enlisting the help of a trusted online foreign exchange service that offers relevant resources and helpful tools, such as email market-rate alerts, can make it easier to keep costs low when converting currency and sending money overseas.

2. Set Up a Group of Advisors

Hiring a group of advisors with various financial specialties can be very helpful, especially during the initial weeks and months following the move, says Douglas Goldstein, CFP, president of Profile Investment Services Ltd., a cross-border financial planning and investment company based in Jerusalem and Miami, and author of The Expatriate's Guide to Handling Money and Taxes.

A cross-border financial advisor should serve as the "quarterback" of the team, Goldstein says. The advisor's credentials should include a license to practice in both the home and host countries. Other considerations include whether the financial advisor has had issues with regulators, which can be checked online, and whether the advisor is paid by percentage of assets or by the hour.

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Hiring should also be based on the advisor's strong professional record rather than one good year, Goldstein says. "The advisors should help you figure out your goals, understand your risk tolerance and decide on an asset allocation," he says. "Then they should help you choose specific money managers or mutual funds in which to invest. When picking among those choices, don't look only at past performance, since it does not prove what will happen in the future. Rather, look at the volatility of the managers and their results versus other similar portfolios. Also, consider the age and size of the fund and recent changes in the fund's operations - like if they keep changing lead manager."

Other members of the team should include a cross-border attorney, tax planner and an insurance advisor, all of whom should also have licenses to practice in the host and home countries.

While these financial steps are very important, they don't encompass every concern that a future expat should plan for before living overseas. To learn about other crucial considerations, it's a good idea to enlist the help of a personal financial advisor who specializes in expatriate issues.



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