America, you are better than this!

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America, you are better than this

There are times, when I watch or read the news and am flummoxed by what I learn, particularly when it involves America. I don’t know why particularly, but I’m often left thinking – America, you are better than this!

Perhaps its due to personal contact with Americans, which to date has always been a good experience. Trips there over the years have been wonderful experiences and of course I’m a consumer so have enjoyed many aspects of this… let alone the many wonderful artists, film makers, sport stars and musicians.

We all know that we have a special relationship with North Americans, largely because we speak the same language and tend to fight the same fights. We share common values. Of course American foreign policy and politics is something rather different (and I won’t get into it now).

Liberty and Freedom

Whilst we are all aware that nations are scratching around for money and tax evaders are public enemy number one. It does seem somewhat at odds with any sense of American values. I’m talking about FATCA (Foreign Account Tax Compliance Act). This is based upon old tax rules about ensuring income is properly reported to the IRS (American form of HMRC).

Sledgehammer and Walmart… or rather Walnut

Due to the more sanguine approach to tax evasion (surely a good thing) there has been a series of “unintended consequences”. In essence, as the IRS demand income is accounted for, they require all foreign entities to report holdings of US citizens. As the significance of this has gradually dawned on the world, most financial institutions are avoiding the problem by ceasing to provide financial products and services to Americans. This is because, the US seems to wish to take the stance of applying onerous fines, in advance to the financial institutions.

As the rules about how income within investments or indeed from any assets is taxed operates differently from one country to another, but the US does not apply the local rules, deciding to apply their own. This makes a mockery of most of our normal arrangements such as pensions, property, ISAs, Trusts and so on which are essentially just treated as “savings”. There are complexities as you may imagine, but I won’t bore you with them here.

In essence, every US citizen, wherever they live has to submit a tax return. This has come to be understood that almost without exception, no financial institution wants to deal with American citizens for fear of being fined first and having to spend huge amounts of time justifying the whys and wherefores of common sense.

As a result Americans living outside of the US are finding it increasingly difficult to get basic things like a bank account, let alone anything as sophisticated as a UK pension!

Handing in US Passports

This has resulted in the bizarre situation of many Americans being essentially forced to renounce their US citizenship. Something that is frankly “nuts” in a costly process that seems akin to a public shaming with a Headmaster. There are about 9 million Americans living outside of the US. If you were born in the US, you have American citizenship – like the current Mayor of London, Boris Johnson, who was born in New York, you will be faced with the requirement to comply or say goodbye. He ended up having to pay the IRS various taxes on his UK assets, then declared he would be giving up his US citizenship.

There is a good piece on the BBC site about how American’s are finding this “hard going” with a bit more context. However, it is creating serious problems for UK financial institutions and advisers who are finding solutions very difficult to achieve for anyone with less than £500,000 of investments… and as you may imagine, the price for something of this importance (and risk to the organisation) isn’t as competitive as it might otherwise be.

America, you are better than this!…. at least that’s what I hope.

As for a film connection, if you are an American citizen living in Britain, you may feel as though you are being unfairly targetted… as though you are an enemy of the State. So here’s the trailer to this Will Smith and Gene Hackman movie.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

America, you are better than this!Dominic2025-01-27T16:52:48+00:00

War and Peace

I suspect that you will have seen the promotion for the BBC1 Sunday night drama – Tolstoy’s “War and Peace”. The story, one of the longest written, but still “short” at 1,440 pages and 561,093 words when compared against the 10 volumes of “Artamène ou le Grand Cyrus” and a massive 1,954,300 words for which the certainty of the author is questionable.

One of the many criticisms of the financial services industry has of itself is the amount of information that “needs” to be provided to investors. The prospect of reading a report containing jargon and frankly often dull, uninspiring information is… well….uninspiring.

Improvements for 2016

We have worked hard over the years to reduce our versions of “War and Peace” generally by providing a summary letter together with an Appendices. The information is helpful, to some extent important, but often hard to produce in any succinct manner. There are other agendas to consider too – the regulator wants to be assured that investors are given sufficient facts and risk warnings, whilst the professional indemnity insurers want to ensure that every possible loophole is addressed to avoid any grounds for complaint.

Of course getting documents right is important, as highlighted in the BBC’s opening episode, which concerns the Will and beneficiaries of Count Bezukhov, as often is the case… where there’s a Will, there’s a crowd..

So for those of you that have received reports over the last couple of years or so, I wonder if you have any comments or thoughts about how we might continue to make some improvements – after all we are attempting to explain how we propose you handle your money. I welcome your feedback.

The BBC have condensed the novel into 6 episodes on Sunday evenings at 9pm. Click here for further information and the BBC i-player.

Dominic Thomas
Solomons IFA

War and PeaceDominic2025-01-28T14:35:49+00:00

Honesty Report

I was listening to the radio on Wednesday morning and a story that caught my attention was about a report published by Noddle, the credit rating agency. In essence their report is perhaps best described as an honesty report.

The research reveals something that anecdotally, most of us probably know already. The data, when extrapolated suggests that something approaching 1.9million couples keep financial information secret from one another. The suggestion being that this isn’t simply a case of not fully admitting how much was actually spent at the shops, or how much those birthday gifts really cost, but a rather more concerning inability or unwillingness to reveal the degree of personal debt.

The report found that 44% of married couples do not know how much their spouse earned. Relate therapist Arabella Russell and MD of Noddle Jacqueline Dewey briefly discussed some of the issues about couples struggling with honesty about money on the Radio 4 Today programme with Justin Webb. The BBC remove programming after a while, but the link is here.

Over the years I have observed many different approaches that couples take to the subject of money, all have their presumptions and “baggage” and I try to gently discover attitudes towards money, it is, as Arabella Russell outlines, so much more than simply an accounting system, how we think and talk about money connects deeply with how we think of and value ourselves (and others).

Common language

It isn’t quite the case that talking more honestly about money would save marriages, how couples communicate is more complex and frankly the territory of therapists not financial planners. However, it is clear (and obvious) that money is a one of the most significant “stress points” in any relationship. Relate’s own report “The Way We Are Now” found that 61% of adults with children, found that money worries was the greatest strain on their relationship, for those without children the figure reduced to 47%. That said, the report does provide some good news – 87% of people in couples are happy with their relationship.

Speaking Safely

When I meet with couples, it is important that both people are able to express themselves in relation to money and their hopes and fears about the future. I am often told at the end of our meeting that the experience wasn’t what had been expected… despite the website and this blog, most new prospects seem to assume that this is all “marketing” and that in fact I will “revert to type” and just talk about numbers, products and bore them to tears. For many, simply sitting down together with an impartial third (me) who asks pertinent questions about their past, present and future is a rarity. It’s different for each, but it is certainly clear that it is a welcome experience and the opportunity to get some clarity of how things really are.

Of course such a discussion needs to be conducted thoughtfully and sensitively. It isn’t therapy and it isn’t confession, to my mind its a safe space, to clarify… the issues that are raised may or may not be then requiring either therapy or confession, that is naturally dependent completely upon the couple and the information revealed. Of course this is not limited to couples, I would argue that anyone should benefit from “speaking out” what they think, feel and have experienced about money. To my mind self-awareness is vital for any financial planner operating in this way, ensuring that the discussion is about the couple or individual concerned, not their own projections.

Why is it important?

Saving relationships is simply not the domain of a financial planner, however anything that helps improve the lives of our clients – understanding their own truths and being able to reflect back the reality of things is invaluable. We all know that life can be messy, some relationships end, some very painfully, some can be improved… but we can all probably improve how we listen to one another. I have no doubt that having clarity about money (financial planning) will reduce financial stress for everyone, the real question is can you make the time to listen and be heard?

If you or someone you know are seeking therapy or couples counselling, I suggest visiting the websites of the BACP and Relate for couples.

Dominic Thomas
Solomons IFA

Honesty ReportDominic2023-12-01T12:19:58+00:00

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