The Schroders podcast, featuring Heale and Saxer: 2010's 'Fear and Total Confusion Act,' and other U.S. expat challenges

(...The fact that a number of major U.S. wealth managers famously refuse to accept American expats into their non-U.S. investment plans, owing to the costly compliance hassles that such clients necessarily require, of course, helps Schroders in this regard.)

Heading up Schroders Wealth Management US Ltd's investment operations are its co-portfolio directors, Martin Heale and Janette Saxer. Although neither is American themselves, they have decades of experience working with U.S. clients, three years of which they've been working side by side in their current roles at Schroders.

Here, in a podcast recorded some weeks ago, they discuss (with me) how things have evolved for Americans abroad, while sharing some of their thoughts on subjects like FATCA, certain little-known-about but important information reporting requirements that American expats are expected to file annually, and even a few of the funnier and quirkier aspects of U.S. regulations that apply to Americans living outside of the United States... 

Among other points, they emphasize – although, eleven years on, it's hardly new – that the Foreign Account Tax Compliance Act (FATCA, or as Heale calls it, the "Fear and Total Confusion Act) has made life extremely complicated and confusing for expats.

And even now, Heale adds, "we come across people who don't realize they're American and that they should have been filing tax returns [from abroad] from the age of 18." 

Like most people who've worked in an area where regulations can be onerous, Heale and Saxer can not only tell spine-chilling stories about the compliance nightmares some Americans have found themselves caught up in, but some unintentionally funny anecdotes as well. Such as the time an American accountant who was more familiar with U.S. accounting regulations than the London Underground network had genuinely concluded that a client's Oyster card was "actually a foreign account that need[ed] to be reported" to the IRS.

Then there was the case of the client who "had been born in a foreign embassy in the U.S." The question arose, naturally, as to whether this meant they were born in the U.S., or, because it was a foreign embassy, in a territory of the country in question.

"We'd not come across that before," recalls Saxer. "So we referred the case to a leading international tax attorney.

"Interestingly, the answer came back that if the foreign embassy was owned outright by that foreign government, then they were not born on U.S. soil, and therefore were not a U.S. taxpayer.

"If in fact [the embassy] had been rented, then it was felt that they were born on U.S. soil, and were obliged to pay U.S. tax.

"Very interesting, very helpful for us, and of course, it helped the client." 

To listen to the Heale and Saxer interview podcast in full (around 25 minutes long) on the Schroders website, click here.