401(k)s for International Professionals – Investing Globally

Join us for the last segment of our three-part series on 401(k)s and IRAs for international professionals in the U.S. In this edition, Andrew Fisher, president of Worldview Wealth Advisors, wraps up this topic with a discussion on what to do with 401(k) accounts left at an old employer and how to best invest the funds.


Key areas discussed include:
• What you should do with a 401(k) issued by a former employer?
• How should your 401(k) or IRA be invested?



Hello and welcome to Worldview’s Cross-Border Wealth series. My name is Andrew Fisher, president of Worldview Wealth Advisors and today we have part three of our three-part series on how 401(k)s work for international professionals living here in the US. Part three of the series we’re going to talk about how and where to invest an old 401(k) at old employer.


The agenda for today is we will talk first about what to do with a 401(k) at a former employer, and next, how should that old 401(k) or IRA being invested.


So what to do with an old 401(k) at a former employer? Well as we said before, the US is really a terrific choice as far as the location of where to locate of global portfolio. You really can build programs that work no matter where in the world that you live. And this works both for 401(k)s  and IRAs but also for your after-tax investment accounts as well.


So what we recommend our clients to do is to roll over their 401(k) into an IRA, or an Individual Retirement Account, at a large US institution and then from there managing in a global way that matches their risk tolerance level. We partner with Fidelity Investments who we think just does a terrific job with the cross-border families and can accommodate quite a lot of international issues that we confront every day with our clients.


For example they’re one of the first to offer multi-currency accounts here in the US. The terrific tool that we’ve been using for a few years now allows us to hold international currencies as well as to translate, send and receive. It really helps our clients who need to move money around the world easily and inexpensively. Now it can be difficult from abroad to manage an accountant based in the US, just as it’s getting more and more difficult to manage an account in, say, Germany the UK or India while you’re living here in the US, but then again that’s what we come in.


How should an old 401(k) be invested? First and foremost it should be invested in a way that’s risk appropriate. It should have a mix between growth investments and stable investments that yield income. And generally the mix should become more conservative the closer you moved to retirement at the point where you really need to live off those funds.


International people, of course, tend to have a much more global lifestyle and for that reason it’s extremely important that their investment assets match their retirement destination. The problem with that is for many of our clients its unknown. So in those cases we go out of our way to make sure that our portfolios are globally oriented and exposed to a basket of currencies and a regional exposure that brings them exposure to the whole world economy. Incredibly important, and of course it’s really important for everyone in this world, but especially important for cross-border families.


Now, a typical account in the US will have anywhere from 10-20% in international investments and this is totally inappropriate for a cross-border family. In my opinion it’s also a mistake for them in terms of their investment outlook because of the globalization of our world and the sources of growth around the world are more and more likely to be outside of the west, outside of Europe and the US.


I’ll give an example of one of our clients who struggled with this issue of global exposure. The lady, European lady from Germany who lived for many, many years in the US and built up a pretty large investment account here. She retired back to Europe with a very conservative investment portfolio, almost all bonds and very, very safe investments. The problem was she used a regular US stockbroker who had her almost entirely in US dollar bonds. And this was a time in the nineties when the euro rose relative to the dollar by about 50%, the dollar fell against the euro, effectively wiping out about half of her buying power. She was of course in shock and we met her after that. It’s really unfortunate but it just makes the point of how important it is that your investment assets match you were retiring destination or that they be globally oriented.


There’s a misconception that it’s where the assets are located, it’s not. You don’t need to have an account in London, an account in the US, an account in Japan. It’s really about where the underlying assets are. We can buy, from an account here in the US, a German bond denominated in euros and we can buy a Brazilian stock in reais, and have all of that global exposure from one account, which is a great thing. I think a lot of people build a more complex investment program with multiple accounts in different countries and they don’t really need to.


This is really why we, here at Worldview, created our international lifestyle portfolios. We saw the need for a single investment solution for cross-border families with investment assets here in the US, in particular their old 401(k)s and IRAs. We decided to be a low-cost, globally oriented portfolio that’s all held inside of your individual account at Fidelity Investments, a third-party a brokerage firm. The investments are located all around the world and are adjusted dynamically based on market conditions. But we of course own a very global portfolio with exposure to international real estate, foreign currency bonds, international dividend focused stocks, and it does come in for different strategies for various risk, anywhere from aggressive too conservative.


There really is a large community of cross-border families out there, both in the US and abroad outside of the US, and it’s becoming an even larger community of people as the world becomes more global. These people tend to be very successful but also very busy, and don’t often have time to do it themselves, or have a very difficult time finding others who understand their issues.


Thank you very much for your attention. For our three part series on how 401(k)s work for international professionals


For additional questions or to contact one of our advisors please email us or call us at 503.620.3600.