Where to get good financial advice?

mattdrummer

Hi folks,

I'll outline my situation a little below, but the main query I have is: where should I go to get good, reasonably priced financial advice?

I live in London but am open to looking outside for the right advice if it means better value for money.

In terms of what I'm looking for advice on... it's partly about investments, partly about pensions, and partly about tax efficiency. The complication is that it also has a US dimension, since I lived there for six years.

In short:

I have some money invested in stocks in the US that at some point in the near-ish future I'd like to use for a house deposit in the UK. I don't know how to get it back here tax-efficiently, or even how that would work / what regulations I'm subject to

I'm self-employed. I have a UK pension from previous employment, but want to add to it in an efficient and sensible way while self-employed, and would like some advice on this

I have missed previous years of state pension and need to decide which to top up

I have two US retirement accounts from previous employment and don't know what to do with them

I'm not too sure where to go with this list, or even how to search intelligently for the right person/institution to advise. Any advice greatly appreciated!

wjr4

Unbiased or VouchedFor

eskbanker

I'd suggest that this forum is a likely place to get helpful guidance, albeit not formal financial advice - you can indeed engage with independent financial advisers for the latter but you may struggle to get sufficient benefit to outweigh the cost.

There is plenty of information already on the main site and the forum so research there first, but if you need something more specific, you'd need to be prepared to share more details, especially regarding the amounts involved - for example the question about selling shares and transferring the proceeds effectively boils down to recognising your annual capital gains tax allowance (£11.7K) and planning accordingly, plus researching cost-effective currency conversion (https://www.moneysavingexpert.com/banking/foreign-currency-exchange/).

Q2-4 about pensions - there is a section here (https://www.moneysavingexpert.com/pensions/) and a dedicated forum board (https://forums.moneysavingexpert.com/forumdisplay.php?f=19), as well as plentiful guidance at the likes of https://www.moneyadviceservice.org.uk/en/categories/pensions-and-retirement and https://www.pensionwise.gov.uk/en

For example your question about missing years is covered at https://www.moneysavingexpert.com/savings/state-pensions/#boost

For the matter of the US retirement accounts, maybe try posting details of your question on the MSE pension board?

OldMusicGuy

You probably need multiple advisers, as things like US tax and 401ks are specialized stuff and most IFAs that would give you good pensions advice will not know about them. It will get expensive quite quickly. I would suggest you do some reading yourself about pensions, and go to forums like this one for advice on US tax and retirement accounts: https://www.expatforum.com/expats/expat-tax/

Regarding a US 401k/IRA, you basically have two choices if you want to take it in the UK. You can either take it as a single lump sum distribution and pay US tax on it, or you can make phased withdrawals, in which case each withdrawal will be subject to UK tax. You need to find out if you have a Roth IRA or just an IRA, as Roth IRAs are tax free and I presume the tax treatment would be different.

I recently cashed in a 401k/IRA as a lump sum and paid US tax on it. If you cash in an IRA/401k before age 59 1/2 you pay additional penalty tax on it, so best not to do that if you are not older than that.

PS: I assumed from your post you are a non-resident alien for US tax purposes, which is my status.

bostonerimus

I assume you are not a US citizen or Green Card holder as that will complicate things a bit.

What US retirement accounts do you hold? If you have small amounts in something like a 401k/IRA it might be simplest just to cash them in and pay the tax and the 10% early withdrawal penalty, or you can just leave them alone until you are 59.5 and make withdrawals as described above.

What US stocks do you have? are they individual company stocks or funds?

xylophone

Have you obtained a state pension statement?

https://www.gov.uk/check-state-pension

dunstonh

Unbiased or VouchedFor

Unbiased now includes restricted FAs. It has also repositioned as a lead generation site. Its not longer a directory for IFAs and most IFAs I know have ceased to be paying for its services.

Vouchedfor has very little coverage. I can't remember if its them or Trustpilot but one of them has massive charges and takes a cut of what the adviser earns.

Most IFA firms I know dont use any of them. They don't need to. Google brings in the most,

The complication is that it also has a US dimension, since I lived there for six years.

Are you a US citizen? i.e. do you file a US tax return? Its a major bit of info with consequences if you do.

Most IFAs in the UK will not provide advice to US citizens as their PI insurance will not allow it.

mattdrummer

Many thanks for the advice - very helpful.

To answer the questions:

I am a UK citizen and was UK resident for the UK 17/18 tax year.

I was in the US on an F1 visa then an H1B visa, I never had a green card. I was there from August 2011 to August 2017 and filed tax returns for every US tax year from 2012-2017, and I believe I filed as a non-resident alien.

I do not intend to file a US tax return for 2018 (unless someone tells me I need to), but that confuses me a bit when it comes to dealing with the US-based investment. If I have capital gains for money invested in $$ through a US institution but am resident in the UK when I acquire those gains, how does that work?

It also seems to be (in my mind at least) complicated a little by the fact that I invested in a roboadvisor (Wealthfront) which has been selling and reinvesting with a view to 'harvesting' tax losses. When I filled in my US tax returns Wealthfront integrated with my tax software to provide the relevant info, making it relatively straightforward. However if I'm filing a return in the UK I won't be able to do that.

I'm also wondering (belatedly) if there's any benefit to selling up some portion of the investment in this tax year, using any tax allowance, and reinvesting here in the UK.

There's about USD$72K in the Wealthfront account as of now, from $60K invested (though the 'gain' is complicated by the roboadvisor practices as above).

For the retirement accounts, I have a Principal 403(b) retirement plan with about $45K in it, and the other one is with Aon and called a 'Money Purchase Pension Plan'. That one has around $28K in it.

In the UK I've just recently combined a few fragmented pensions into a single pot with around GBP26/27K in it. No investments.

I'll try copying over the pensions stuff to the pensions board as suggested, the tricky thing is I suspect there are some interdependencies between these pieces to consider.

Re. the state pension statement, yes I know what years I've paid/not paid and what I'm on track to receive. What I don't know is the cost/benefit of going back and making up for old years at this point. But I can see that this question at least I can likely just treat separately, it seems less complex than the others.

Many thanks again - really appreciate the advice.
Matt

mattdrummer

bostonerimus wrote: »

What US stocks do you have? are they individual company stocks or funds?

Does my previous reply answer your question about the stocks? If not I can look closer to see what the roboadvisor invested in on my behalf. I think it's mostly index funds (Vanguard / Schwab ETFs).

Excuse me if I'm mangling the terminology...

short_butt_sweet

mattdrummer wrote: »

It also seems to be (in my mind at least) complicated a little by the fact that I invested in a roboadvisor (Wealthfront) which has been selling and reinvesting with a view to 'harvesting' tax losses. When I filled in my US tax returns Wealthfront integrated with my tax software to provide the relevant info, making it relatively straightforward. However if I'm filing a return in the UK I won't be able to do that.

I'm also wondering (belatedly) if there's any benefit to selling up some portion of the investment in this tax year, using any tax allowance, and reinvesting here in the UK.

There's about USD$72K in the Wealthfront account as of now, from $60K invested (though the 'gain' is complicated by the roboadvisor practices as above).

"tax loss harvesting" is designed for people subject to US tax, because some amount (i forget) of losses is allowed to to set against income. it doesn't help you when you're subject to UK tax. typically, when subject to UK tax, you might want to realize gains up to just under your annual capital gains tax allowance.

and if wealthfront have given you a lot of disposals for CGT purposes, it may be messy to calculate any tax liability, and fill to in the CGT section of a UK tax return (if you need to do that).

but it may be worse than that. if you are invested in US ETFs (as you say in another post), then are they reporting funds for UK tax purposes? if they are not (or even were not for any part of the time you held them), then any capital gains are taxed in the UK as income, instead of as capital gains. (but any realized losses are treated as CGT losses, and cannot be set against income.)

overall, you will probably want to extract yourself from wealthfront now you are paying UK tax. and it may be a bit tricky to figure out the tax due before you do.

OldMusicGuy

mattdrummer wrote: »

I do not intend to file a US tax return for 2018 (unless someone tells me I need to), but that confuses me a bit when it comes to dealing with the US-based investment. If I have capital gains for money invested in $$ through a US institution but am resident in the UK when I acquire those gains, how does that work?

If you have income which is "effectively connected" with the US, you need to file a tax return, regardless of where you live. If the Wealthfront stuff impacted your tax return in the US in terms of income in any way, it's highly likely you will need to file a 1040NR. None of the US tax software will work for a UK resident, so you will have to fill out the form yourself or pay someone to do it.

I suggest you read the 10140NR istructions and see if you think the Wealthfront stuff could create a tax liability. You can get them here: https://www.irs.gov/pub/irs-pdf/i1040nr.pdf. If you cannot understand these and decide yourself (and the Expat forum I linked to doesn't provide an answer), you will have to employ a US tax specialist that does expat taxes to help you.

The 403b seems to be the same concept as a 401k, so the best bet is to leave those invested and take them like you would a UK pension when you reach 59 1/2. You cannot transfer them to a UK pension. You will need to decide the most tax efficient treatment for those when you reach that age. Thanks to Mr Trump's tax reforms, it made more sense for me to take mine as a lump sum distribution.