A new report has identified three sub-groups that represent what it estimates is a $6 trillion under-served market of cross-border professionals, US expats and international families with financial interests in the US.

The wealth management business opportunity associated with cross-border families – an already significant but growing segment of the global population – is worth around $6 trillion, according to Maxim Global Wealth Advisors.

The firm's report, launched today, takes three sub-groups of this segment, looking at the financial planning and investment management needs of cross-border individuals, and why it believes this is a compelling but “under-served” market.

Contributing to the surge in number of cross-border individuals and families is, naturally, globalization, with international companies increasingly expanding overseas, for example. Meanwhile, entrepreneurs are being lured to the US technology sector - places like San Francisco, Boson and New York in particular. Some estimates suggest that as many as half of the founders of new Silicon Valley start-ups are foreign citizens, the report, entitled The Growing Opportunity in Cross Border Wealth Management for Independent Financial Advisors, said.

A number of family offices in the US are waking up to the business prospects associated with serving international clients. Family Wealth Report spoke to GenSpring about this here, and spoke to BNY Mellon about the globalization of family offices here, for example. WE Family Offices is another player in the space that has intensified its focus on international wealth management in recent time (see a related article here). However, Maxim Global Wealth Advisors worries that banks and other financial players too often disregard these important investors because they are increasingly associated with a higher level of risk and reporting complexity.

"Because of these structural issues, this underserved segment presents a compelling opportunity for independent financial advisors who can partner with a specialized firm with these capabilities," the report said.

Assuming average investable assets of $250,000, the wealth management business opportunity with international professionals living in the US is worth around $2-3 trillion, according to the report, which said: “These investors struggle with understanding our unique tax code, along with the various retirement and investment options offered to them here in the US. This group generally feels very alone and overwhelmed when it comes to investment and retirement decisions, even though they save a much higher share of their income and thus have fairly secure retirement outlooks.”

Meanwhile, around 3 million of some 8 million US expats are regarded as working professionals or high net worth retirees - a segment that represents between $500 billion and $1 trillion in investable assets (assuming average investable assets of $250,000). While retirement planning and investment management are major challenges for this group, many brokerages and banks are “systematically closing accounts with a foreign address,” the report said. Likewise, many foreign financial institutions no longer serve US expats because of the stringent information-sharing requirements of FATCA regulations.

Then there are foreign citizens living outside the US, without US citizenship or residency, but with US-based financial assets. The size of this segment is pegged at 10-20 million people with total investable assets of between $1-$2 trillion (assuming average investable assets of $100,000).

“A large percentage of this segment are foreign professionals who previously worked in the US and accumulated certain financial assets that remain there even after they’ve left the US, such as real estate, bank and brokerage accounts, 401k and other qualified assets,” the report said. “Additionally, foreign citizens who have inherited various financial assets in the US and have chosen to leave those accounts in the US is also contributing to the growth of this segment.”

The main opportunity with these investors is to provide oversight of their qualified and non-qualified investment portfolios in the US, which would be “nearly impossible to self-direct for a non-resident alien living abroad,” it added.

For financial players that are thinking about their international offerings, it is worth considering that some of the financial planning and investment management issues the report identified as being particularly challenging for cross-border families include: Coordination of 401(k) and other international qualified accounts; personal risk tolerance; overall balance sheet review and asset allocation: stock option and equity compensation analysis; tax strategies and optimization of investment portfolios to maximize tax efficiency; reviews of real estate and other alternative assets; and advanced retirement planning.

Cross-border investors also require specialized client service and administrative support, involving, for example, the movement of funds, managing the process of opening new accounts, transferring assets and executing foreign currency transactions, it added.