Are Advisors Looking Abroad for New Business? 

Just because a client lives abroad doesn’t mean they can’t be in your book.

While the bulk of American advisors’ business is conducted in the US, some are seeking opportunities overseas. Out of the roughly 15,000 independent firms based in the US, 381 advisors are registered with foreign regulatory authorities and provide services to clients in other countries, according to new data from SmartAsset. While foreign-registered RIAs make up just 2.6% of the total population, some firms are finding potential beyond their home country’s borders.

“Taking business overseas may come with a lot of upfront regulatory investment, and so, requires an appropriate strategy to seek an appropriate return on investment,” said Jaclyn DeJohn, director of economic analysis at SmartAsset.

Yankee Doodle Dandy

Over the past year, the number of US states registered with foreign regulators has remained relatively flat, with some slight redistributions out of some states and into others, the data found. Meanwhile, nearly 800 foreign-based RIAs are registered with the SEC.

Northeast states had the highest prevalence for foreign registration, likely due to the wealth concentration, population density and more manageable time zone considerations, DeJohn told Advisor Upside. She added that it’s important for advisors to do their diligence before trying to conduct business in multiple environments, otherwise firms may be “vulnerable to risks, including geopolitical tensions and exchange rates.” The research also found:

• New York leads the country in RIAs registered with foreign regulators, at 130 firms.
• Massachusetts and Connecticut have the largest shares of RIAs working with clients in other countries, at 5.74% and 5.64%, respectively. 
• Though not mentioned in the study, DeJohn said Washington, D.C., had higher rates of foreign financial registration than any state, at nearly 10%. 

World Tour. US-based RIAs oversee about $145 trillion in assets, so it’s no wonder that other countries want a piece of the American pie. The United Kingdom has 248 firms registered with the SEC, representing almost a third of all the foreign RIAs operating in the US, the data found. Canada has the second most RIAs doing business in the states at 138 firms. And Hong Kong accounts for just over 8% of foreign RIAs in the US with 66.