Company Profiles

Transatlantic Wealth House Eyes Changing US Tax Scene, Global Uncertainties

Tom Burroughes, Group Editor, March 24, 2021


The firm is one of a number of international businesses that - in contrast to many regular banks and wealth managers - continues to serve wealthy US expats' financial needs. Possible tax hikes, Brexit, and heightened focus on estate planning amid a pandemic have made for a busy few months.

A new US presidency and Congress, a UK that is now outside the European Union and a global pandemic that disrupts normal business. As a combination of forces go, that’s quite a set of challenges for a wealth management firm specializing in cross-border clients.

For a business such as London & Capital, one of a small number of firms catering to expat US clients and foreigners working in the US, the past year has been testing, coming after a year (2019) when Daniel Freedman, its chief executive, died suddenly. He was succeeded by Guy McGlashan.

However, there is more to L&C than the transatlantic dimension; the firm has had to decide where best to position itself now that the UK is out of the European Union.

The prospect of higher US taxes on the wealthy under the new Joe Biden administration is certainly getting the phone and Zoom lines buzzing at this firm. On top of this, the pandemic, and ongoing themes about inter-generational wealth transfer, provide plenty of work, Iain Tait, partner and head of the private investment office at London & Capital, told this news service. 

The move politically leftward by the US administration and Congress is likely to mean a partial overthrow of some of the tax cuts made under Trump's administration, such as the doubling of estate tax exemptions. This is likely to drive estate/financial planning work for L&C among its American clients outside the US, he said. Over Christmas and the New Year, some of the firm's US clients moved quickly to take stock of the older tax regime before any changes were made.

When expat US citizens and others with US connections want to obtain financial advice, they are often quite worried about the bureaucracy and the issues involved with being an expat.

“We are actively moving assets from the older generation. There is a big transfer of assets, and we are seeing use of entities such as grantor trusts,” Tait said. “This wealth transferring is also evident in the UK market – clients are clear in the knowledge that further tax hikes are coming down the line.” 

“For US reporting families, there aren’t many other people doing what we do. There are very few managers who have that expertise, the structuring and who can provide long-term discretionary wealth management under one roof,” he continued. 

Other organizations that cater to US expats in the UK include Schroders Wealth US, Royal Bank of Canada, Saranac, Vontobel, Maseco, and UK wealth manager James Hambro & Partners operates in the space. On the other hand, when the US Foreign Account Taxation Compliance Act (FATCA) was signed into law in late 2010, some international financial firms outside the US such as HSBC and Deutsche Bank ceased to serve expat Americans. For that matter, a similar fate has befallen expat UK citizens living in the EU after Brexit.

There is also a cluster of Switzerland-based investment firms and advisors looking after US expats, showing that wealthy Americans can still obtain financial services in the Alpine state after the US clamped down on secret Swiss accounts almost a decade ago. SEC-registered advisors working in Switzerland include Hyposwiss Advisors SA, Pictet North America Advisors SA, Reyl Overseas, Swisspartners Advisors, and UBP Investment Advisors SA.

London & Capital’s business growth. It oversees $4.4 billion in AuM, up from around $4.0 billion at the start of 2020. “Despite COVID and market challenges - we were pleased to have had a solid year – adding to both overall clients and AuM,” Tait said. The organization employs around 100 staff at its Mortimer Street offices in London’s West End; there is also an office in Barbados servicing the captive insurance market that L&C is active in.

L&C obtains new clients via several routes: it talks to networking organizations, business clubs, alumni groups at universities, advisors, and other groups where expat Americans connect, to spread the L&C message. And a significant influx comes via word of mouth recommendations. 

“We continue to grow and see opportunities for further growth ahead for our sector.  Both here in the UK and in Europe. There are very few competitors this side of the pond with our US/UK expertise and our ability to work with fellow financial professionals, as the main sector of clients represented within the private investment office also stands us apart,” Tait said. 

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