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Wealth Management for Expats in Japan

Submitted: March 2014

As a rule, Japanese wealth managers are all trying to take a market share in cash-rich Japan. Japanese high net worth individuals have been traditionally reluctant to confer their money though. Importantly, the wealth management industry in Japan is still at its early stages, as the financial liberalisation reforms took place in 1998 only.

The Japanese wealth management industry includes trust banks, the Big Four city banks, such as Nomura or Mizuho, but there are also leading international banks, such as UBS, HSBC or Société Générale. Smaller Japanese banks may offer wealth management services as well.

Wealth management professionals are regulated by the Financial Services Agency.

Generally speaking, you should look for a wealth manager if you think you need help with financial planning. A financial institution is prone to offer you more sophisticated services when you are or get wealthier. These services range from traditional lending or investment management to inheritance tax planning or asset protection.

 

Issues for expatriates

Financial planning complexity increases dramatically when you become an expatriate, as additional cross-border issues must be taken into account. These include, but are not limited to:

  • International availability of liquid assets
  • Social security arrangements in your host country
  • Effects of international mobility on your pension
  • Your residency status for income tax purposes
  • Asset protection
  • Foreign exchange exposure see Foreign Exchange for Expats in Japan
  • Inheritance law considerations, and
  • Inheritance tax planning.

It is essential to check if your wealth manager is qualified enough to deal with your specific cross-border issues. Foreign wealth managers may be prohibited from offering their services to Japanese residents.

In all cases, be wary of:

  • Language issues
  • Cultural differences, and
  • How contactable your wealth manager is.

 

US taxpayers

It may be harder for US citizens to find a relevant wealth manager outside the US. This is because US citizens remain subject to US tax rules, even when they are resident outside the US. Thus, a financial product which is tax-efficient for the Japanese is not necessarily tax-efficient for US citizens resident in Japan. Consequently, US taxpayers have US-specific needs which interact with their Japanese needs.

If you are a US taxpayer, you are likely to need a specialist wealth manager, i.e. with the appropriate qualifications and licences for advising US citizens resident in Japan.

 

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