Ep.20_Oleg Zviagin of Proxy Financial on Complex Immigration Financial Planning Strategies

On today’s episode of Investing in the American Dream podcast, we have featured guests Manuel Ortiz VP of Global Business Development at FPP - and Oleg Zviagin, Director of Financial Planning at Proxy Financial.

Oleg specializes in complex financial planning strategies including multi-generational planning, trusts & estate, employee stock options/restricted stock, insurance, college, and retirement planning. Oleg has spent 9 years working with high-net worth individuals across the globe.

In this part of the series, Oleg will be going more in detail on the pre & post immigration planning that investors should consider and the personalized services available to investors through this partnership with Proxy Financial.

CONTACT:
Oleg Zviagin oleg@proxyfinancial.com
Manuel Ortiz: mortiz@firstpathway.com

WEBINAR:  Wednesday, September 20th 10am CT
https://us02web.zoom.us/webinar/register/WN_pGpljULvSvqK4b6qGO7KZA 

Transcript

Unknown: 0:00

On today's episode of investing in the American Dream podcast, we have featured guests, Manuel Ortiz, VP of global business development, and FPP. And Oleg sebahagian, Director of Financial Planning at proxy financial Oleg specializes in complex financial planning strategies, including multi generational planning, trusts and estates, employee stock options, restricted stock, insurance, college and retirement planning. Oleg has spent nine years working with high net worth investors across the globe. In this part of the series, Oleg will be going more in detail on the pre and post immigration planning that investors should consider and the services available to investors through proxy financial, let's get into it. Man well, and Oleg, thank you both for joining me today on the podcast. You know, I think that we both had gotten a lot of questions since that last episode featuring this dynamic partnership with proxy financial. And oh, like, I'd like to start with you, and maybe ask one of the first questions as part of the pre immigration planning what, you know, when is it appropriate to start pre immigration planning? Thank you, Jessica. Happy to be here. This is a great, great subject. So pre immigration planning is kind of a term that we may have even coined, it's definitely not an official part of the financial planning process. This is something that we've kind of had to roll out and implement as part of our focus on our international clientele. Now, the there's an easy answer to this and a difficult answer. The difficult answer is, theoretically, you could start the conversation at any point. As far as pre immigration planning goes, the this more simpler answer is we don't like to get involved before certain commitments are in place. So the best timeline for someone who is considering immigration is around or after they've taken certain steps to kind of get the ball rolling as far as getting some form of naturalization here in the States, whether that's through the EB five process or through work visas, through student visas, whatever the case may be, as long as they're ready to engage in those steps. That's the perfect opportunity for us to jump in as far as pre immigration goes. And oh, like, I think you bring up a really good point, because this really ties into EB five in such a great way. You know, for EB five, it typically will happen when investors or when people want to migrate to the US, it requires an $800,000 investment. And it allows for the applicant spouse and unmarried children under the age of 21, to obtain their US permanent residency. Now, what's interesting about that is that, you know, what you're seeing with USCIS, which is the US immigration processing times there vary wildly. And I think what you're also starting to see is that USCIS is saying that by the end of this year, they expect for processing times to get a lot better. From a international investor standpoint, really that clock for the international tax, right, the global tax, whenever you become a US resident starts for somebody after their first application, typically, shortly after their first application that I 526 is approved, so when they received their conditional green card. And so with that being said, you know, what the pre integration planning Oleg, you know, what should be the main goal that investors are looking to achieve, again, because the clock starts when they become a green card holder, which happens whenever they get their conditional green card. And so as you're going through that, you know, let's say that they decide to take EB five, and maybe now you're looking at anywhere from, you know, two to five years again, because the processing times do vary quite a bit. You know, once you get to that point, you probably want to have your your plan somewhere within that window of time right prior to becoming the US resident. That is correct. So EB five is actually one of my favorite timelines to work through. There is variance, but it's usually not a variance on like an individual level. It's more based on timing of submission. And because we have a lot of rolling projects and a lot of rolling programs, we're able to kind of predict when that next tranche of applicants will be approved, which gives us a lot of basically, we were able to construct a timeline well out in advance and implement steps based on on that timeline. So to kind of dive a little deeper into what the focus of that pre immigration planning is around the time of the official naturalization, the the main focus for pre immigration planning is actually education. The biggest thing that we see that our international clients struggle with is adjusting to kind of the expectations and the conditions of the United States something that, you know, those of us that have been here since childhood or, you know, emigrated earlier on, kind of take for granted. Because we we've lived in it for so long, there are certain things that are almost internalized to the point where we don't realize that this is something that, you know, immigrants may not, may not be accustomed to. So the the big part of pre immigration planning is educating our clients on what to expect, how to take out loans, how to build credit, how to, say make considerations when building their businesses, or structuring their incomes when they come here, it's all about pre emptive steps and pre emptive adjustments so that when we finally get to the actual implementation piece, there's full buy in, because that's one of the most difficult things to kind of work through when when building out a financial plan from scratch. A lot of strategies only work insofar as there's commitment at every step of the process. And the best way to get commitment for every step of the process is by building that trust and creating that educational component. And only one quick question for you, as well as elucidating. To talk, it occurs to me that you're working with international investors, you hear a lot about the transition to the US when when they're here, actually. And there are a lot of things that maybe they didn't take into account, you know, one of those is okay, how do I get a driver's license how to do those things, but the other one that often comes up as well is something as simple as, okay, they don't have a credit score yet. And you know, sometimes you need a car, right? And so they go out and buy a car and know what we've seen typically are these other expenses, that now investors have to take into account that maybe they didn't think about, you know, one of the things that we see with international investors is that they come to the US. And, you know, the thought is that they have to buy everything cash, right. And so maybe you could talk a little bit about how you work with investors with those sorts of things as well that sometimes aren't really thought about until you're actually here and realize, oh, wow, okay, now I have to think about this. Yeah, of course. But that's exactly right. That's the big focus of the pre immigration plan. It's building out that educational component, and making sure that everyone's kind of aware of what they should expect when they come here, as well as what pitfalls to avoid. But the the supplemental piece to that is beginning to create a footprint. So especially with foreign investors, this is a really big topic of conversation is moving over assets to the States starting to invest here and create that that trail, even maybe opening up some credit cards, if they have businesses here, that allows them to have a stateside address that they could assign that to so that they're able to be a little bit pre emptive about those certain things that do come with, let's call it an immigration premium, just because there is no formal identity structure that is currently in place for those individuals in the States. These are these are small things that we're able to work towards. Unfortunately, we there are hurdles, and there are kind of thresholds that need to be crossed when the naturalization is official. But we do our best to make sure that we our clients are able to hit the ground running the very day that that is. And you know, you talked a little bit about like expectations within the planning stages, and, you know, strategizing, but what are some of the other the other like things that proxy can do for our clients or for clients that are looking to immigrate at this stage of the immigration planning. So in pre immigration, with the exception of kind of the big ticket, you know, general items that we're not able to implement until the naturalization stages. There are certain considerations and this particularly pertains to big families or high net worth individuals, were able to start having conversations on things like insurable need planning, you know, what are the different protections that you need to make sure that you have in place the very day you come here? So we're talking about life insurance, especially if there are children or dependents, or perhaps one of the spouses doesn't work? We're talking about health insurance. We're talking about disability, long term care. We're talking about property and casualty auto Insurance, everything that you could think of everything has to be accounted for. On the high net worth side, there's always a consideration and always a concern of what's going to happen to my assets, if something happens to me, and every country has a very, very different structure when it comes to inheritance rules, and the United States is no exception to that rule, we have incredibly complex estate planning rules, which actually differ by the state, not only on the federal level, and it is the one of the things that we're actually able to do, once we know that there's firm commitment from the client to complete their immigration process is we're able to start building out those foundations on those thresholds Even going as so far as creating estate plans for clients in anticipation of them coming here and moving all of their assets over and, you know, being subject to our laws here. Yeah, you make a really great point on that, too. Yeah. Like and then with, with what you're saying, as well, as investors are coming to the US. And in pursuit of the American dream, I guess what, what my thought is, as well as that, you know, they're taking into account schooling, right. So they're looking at private school, public school, where, where they're going to live and those things, are you guys, are you involved on the education process as well? Because I guess those are considered expenses also, right? Yes, absolutely. So education is kind of a a subcategory of financial planning, in that you're able to make suggestions and make recommendation outside of the financial plan, you don't need nearly as much set in stone, so to speak. And education is one of those really interesting expenses in the in the country, because it's historically has had one of the most awkward growing inflation rates relative to just base inflation. So historically, speaking, college costs have gone up between four to 8%. Over the last, you know, 1020 30 years, that we are seeing somewhat of a plateau. But that's never something that we in the financial space can rely on, we can't predict out these things. So it's always best for us to work from the conservative assumption. So usually, we assume that college costs will increase at a rate of about 4%. When it comes to foreign nationals, whether they're part of the immigration process or not, if they're not considered a legal resident, they are considered out of state applicants. This doesn't make a big difference when it comes to private institutions, private institutions, usually, when they don't get state or federal funding, they don't have certain incentive programs. But if we're talking about city or state schools, those certainly do. And for those schools, there is a substantial discount for being a resident applicant to those states than applying from outside of the state or the country. Thank you so much. For that point. I think, you know, we were going to talk about this later. But now that that, that we're here, let's jump into it, because I think that there is such value, and the power of EB five is actually unlocked, especially when, when you're talking about university costs, and studying the US and a family migrating to the US. You know, one of the numbers that I've always heard thrown around is that sometimes if you're an international student, it can cost anywhere from, depending on the school, obviously, 50 to$100,000 per year, which is a huge amount. And if you have four kids, you know, now you're looking at, you know, potentially a maximum of like$400,000 per year. And you think about it, you know, if you're a ultra high net worth, international investor, you think about that cost and well, you know what, it is still less expensive than the EB five, which is per investor. And then that covers, again, unmarried children under the age of 21. Is that Well, that's still$400,000. That's cheaper than$100,000 investment, which is true, however, what you can't really measure. And what's really just priceless here, is that when you graduate from university, if you think of just being an international student, and you've studied in the US for four years, you're at the top of your class, you've worked extremely hard to get to where you are, and you graduate, and then you realize, okay, wait, now I need to have somebody sponsor me to get a job here. And if you look at just the atmosphere and just corporate America, now you're having less and less corporations sponsor students, and so that diminishes the opportunity that you have the Then my understanding also is that you can only work for what you actually studied for. So you have a very narrow channel of what you can actually do. And then further complicating that is that if you look at that particular sponsorship visa, which is called the h1, B, you know, has pretty much transformed into a lottery system where if you look at the numbers from last year, you know, it's somewhere around the 700,000. And I think they approved somewhere from 12 to 14 of those. So your chances of obtaining one a sponsor from a corporation are pretty slim. And winning the lottery, which is what it's turned into, are also pretty slim. But if you have us residency, and you have your EB five, and you've obtained your conditional green card or your permanent green card, well, then it opens up anything, right, you can work wherever you want, you don't have to depend on the corporation to basically sponsor you here. Absolutely. Right. So I can even add to that. So I'm actually based out of New York, and I deal with international students all the time, New York is one of the biggest hubs for international students coming for educational purposes. And I have these conversations all the time. And one of the additional pressures is that they're all paying those out of state fees. So their, their expenses are just substantially higher than a resident would be in general, they, they have to do everything through the school system, which obviously comes at a premium. And by the time they get out of school, one of the prohibitive factors that they end up dealing with, isn't even on the immigration side, it's the fact that they have all these loans that are now they need to account for. And what they end up doing is going back to their home countries until it's more financially reasonable for them to even consider coming back. So there's there's so many additional pressures that international students who come here on visas face, particularly with changes to our legal system changes to our administration's that are in power. I mean, these are rules that are constantly in motion. And it's very, very difficult when you know, you come in year one with a certain set of expectations. And then the rules are changed on you by year four. So there's a lot of lot of variables that come into play, before we even start considering the financial impact of and oh, like you bring up a really good point, which was my next question, because, you know, you're international student, you graduate from university, which gets into well, now you're here in the US. And so, you know, my question was, when should the post integration planning actually start for somebody? So there's, there's multiple parts of this answer. So first and foremost, if we had the time to build out that prematurely raishin plan if someone came to us during that appropriate window, with enough time to plan in advance, the trigger happens immediately. As soon as the social security number is issued. Officially, as soon as that residency is official, we hit the ground running, we're already positioned to execute on estate plans, we're already positioned to execute on life insurance strategies. The clients are already educated on what to look for in terms of establishing themselves in terms of renting versus mortgaging, you know, getting a car leasing versus buying things like that. But we're also already in motion in terms of how are we going to appropriate savings? How are we going to save on taxes? Where is your income going to come from all of these things are already in one form or another decided on, or at least the path to getting to that point is decided on. And one of the things we didn't even mention in turn was specifically in regards to education is the US offers many different avenues of pre payment options for university colleges and universities. In some states, that's even possible on the private K through 12 level. So the sooner that a family with children decides to engage in these services, the more potency their plan is going to have over the long term, the earlier that intervention pieces. And a lot of that has to do with the way that tax deferrals work the way that tax deferred compounding and certain investments work and just how, how far in advance families are able to make informed decisions on behalf of the family and on behalf of the children. Well, this is one thing that that I've never heard. So what you're seeing is that there are incentives sometimes if you're able to prepay for absolutely so in in the United States, every state has as what is called a 529 fund. That is an account that is specifically for the purpose of general education. Now, let me clarify because sometimes people will use the term college planning. But nowadays, that term is very, very loose. These educational accounts are pre funded, they work very, very similar to deferred accounts like IRAs, the only difference is that you have to use those funds for education purposes. Now, the reason I say it's not just limited to college is that we've, over time expanded what education means. So nowadays, it's very open ended, you could have those accounts fund college, you could fund a private school, K through 12. In certain areas, you could fund certification courses, you could fund trade schools, you don't even necessarily need to open this up for a child, you could open this up for yourself, if you know that three, four or five years down the line, there's going to be some kind of educational component to your career. And all of this, all of these funds grow tax free. And as long as they're used for the purpose of education, which, you know, checking any one of those boxes, you never have to pay fees or penalties or taxes on that. Any residual funds. And those accounts can be moved over to a new beneficiary. So it's actually this is not only one of my favorite educational tools, but it's actually one of my favorite estate planning vehicles. Because the way it works is when you fully fund the education of let's say, one child, and there's a younger child that's going to be going through that system, you could use the remaining funds for that beneficiary as well. If there's residual after that fact. Maybe you keep it for the grandkids, nieces, nephews, whatever the case may be. So it's an account that's perpetually in motion with that embedded tax benefits. Let me ask you this, when when you talk about growth 529 planning, what is it actually indexed to? So each state's 529 plan has their own cut, let's, let's say advisors, the ones that pick out the funds in internal to the plan. So you are always going to be limited to whatever it is they're offering. With that said, every single plan will always have what's called an age based index, which is effectively a investment vehicle similar to a mutual fund or a target fund. Rather, that changes its allocation over time, depending on the age of the child and the proximity to actually needing those funds. So in theory, it would work similar to how we plan for retirement, the closer you get to needing that money for the expense, the more conservative and the less risky, the investment becomes. With that said, certain plans do have options for manual planning, which is where we come in, we can build out those elegant allocations on behalf of clients to be a little bit more. Let's call it competitive a rather than just following an index or following certain averages that the funds themselves recommend. The goal of a 529 plan and any retirement or deferred plan is to beat out not an index, but to beat out the cost of inflation. So for for regular retirement, you know, we're looking to beat out on a flight an average inflation of two and a half. For college, we're looking to beat out an inflation of four. So the target usually is somewhere around 6%, for what 529 should return over that period of time. But it obviously is going to matter how early you are able to start that account and how aggressive you were able to be upfront. So what we're talking about is very, very important for international investors and as they're migrating to the US. So what you mentioned was that you're actually able to create a plan for let's say, a family that's looking to come to the US and their needs are going to be different, there are going to be different age demographics, as well. So you could customize something for let's say, a family that is maybe in their, let's say 30s to 40s, somebody that's from you know, 55 to 65. Because those needs are going to be different. And I guess the returns that they're looking to achieve can can be different as well. So you can actually structure something specific to what that families need actually is absolutely every single financial plan we run whether it's for an international client or domestic client goes through a very, very rigorous process of fact finding we will dive into every nook and cranny of the family's financial life we will find out what their goals and plans are. We will even make suggestions as to how they should prioritize their goals and plans, as well as push back on Certain things that may be either overlapping or conflicting in nature. Every single conversation we have is fully catered, we take a very holistic approach to the financial planning, because every single one of these decisions while you know, we can talk about these things in a bubble, in terms of the client's financial life, they don't exist inside of a bubble. They exist inside of the ecosystem of what's going on in their financial timeline. And everything needs to work in tangent with each other, which is why earlier I said, there needs to be buy in across the board when it comes to certain strategies, because we could plan for college. But if that hurts, the client's retirement, that's not a recommendation that I would be able to make. And oh, like you, you really touched and kind of even went into detail on a lot of that pre immigration planning and the steps and what proxy can do for clients. But can you elaborate more on what the client can expect expect from proxy during the post immigration stage of immigration planning? Yeah, so the post immigration stage is really when the process becomes hands off for the client. When it comes to pre immigration, it's all about them committing to the educational pieces, to the timelines to the new systems that are going to be in place and that they're going to be subject to, whereas the post immigration plan is where we get involved directly, where we start implementing where we start managing and maintaining, and when we start actually taking the reins on the client's financial life to the point where the only thing they're ever really responsible for is keeping us updated with any changes in their situation or changes in their goals or lifestyles. Because at that point, the foundation is so well constructed, and well built out that all we really need to do is know how to pivot. And at that point, most of the big pieces are already in place, those pieces that we had not been able to implement through the pre immigration process are already in motion to one extent or the other. And at that point, we're just guiding the client along making sure that they fully understand what steps we're taking why we're taking those steps and presenting them what we like to refer to as opportunity costs to decision making. Every decision that they're going to make from the beginning of that financial planning relationship onward, has a cost, and it'll probably also have some kind of risk or sacrifice that they need to make. So we are there guiding them and showing them exactly what those variables are, we're putting values to things that otherwise would be either unknown to the client or purely conceptual. So really, what the client can expect is full full service, it's, you know, whatever, whatever they need to hand off whatever we're able to get involved in, we are involved in, we are connecting with all of their outside professionals were paid, basically becoming the conduit to every financial decision and every professional relationship that the household has. Mm hmm. And it really ties in with this partnership with FPP. And how we really offer such personalized attention and results with for attention and results for our clients. And I think men well, did you have one other question that you wanted to ask? Yeah, well, just just one quick question. Because as we're talking through this, we're talking about doing two different aspects to geographic regions, right. So one of it is on the international side, depending on where the investor is from. And the other is once you here, which is obviously going to be in the US. And so you have an international platform. And so my question is, how are you able? Do you have people on the ground floor in some of these other countries where they're experts in their area where they can actually help them prior to coming? Are they able to get that one on one relationship like they're able to get here in the US as well? Yes, so we definitely have a very, very large international network. Just to give you a little bit of history, proxy financial actually started out as an EB five adjacent business. So it's, it's the primary focus early on was the international channels, and the registered investment advisor and the financial planning was built on afterwards to kind of supplement all of that, that ended up becoming the primary business for us. That's that's really where we're finding the most value, but we're still maintaining and nurturing all of those international channels because we're one of the only players in the industry to have combined those two services. And we have a lot of people in South America we have a lot of people in Europe, all of which are available to act as experts. During the transition process, when it comes to the investment piece, specifically, we, of course, are hands on with that directly. From both a security standpoint, as well as just us needing to be more hands on with something like that, you know, different countries have different inherent risks and different kind of processes that they have to be subjected to. And we can only do so much when assets and investments are overseas. So one of the bigger priorities is, of course, having everything moved over to the states, where we have that much more control over the outcome of whatever decisions we're making. But But yes, we have a very, very large international network and a lot of different places. You know, Manuel and oak lake as we wrap up today's episode, is there anything else that either of you would like to add or further advice you'd like to share with potential investors out there thinking about investing in the EB five visa program? I think I just like to add that it never hurts to have a conversation. We are what is considered fiduciaries in the industry, which means we're obligated to give objective third party advice. And I think the emphasis there is third party, there's always kind of an angle in the sales and Investment Industry, whereas we're really not allowed to have one. Our approach is simply to guide the client into the best possible solution. And it never hurts to have someone take a look and make suggestions. You know, the worst that happens is you walk away with a skeleton foundation of what you should be considering and looking out for, you know, and I would just add, although you're exactly right, I think the most important thing is to ask questions and have this conversation. And I think that as investors are looking to have those discussions, ask those questions. It's very important to have those with people that you can actually trust. And really what the first step in that trust processes is just a study the track record, right, is Who are these organizations? And who are the people behind that? Because, you know, the way that I've always looked at things is that business is the business of relationships. And you're not in business very long if you don't, if you're not able to build relationships. And I think it's something like this, where you're dealing with just family issues and stuff that could potentially set up future generations. It's very important to build that trust. And I think that's the starting point of that. You know, it's really just a study the track record, and how long has that company built his business, and how have their results looked over time. And all of this is fully transparent when it comes to the registered investment advisors. We have nothing to hide. You know, as we wrap up, I just want to thank you both Oleg and Manuel for sharing your insight with us. And if any of our listeners have questions or want to contact either of you directly, we will again, be sure to include your contact information in the episode description. And I'd also like to add that reminder, if our listeners are interested in learning more, or even offering some additional questions that they'd like to have answered, we are having a live webinar featuring both Brian and Oleg from proxy on September 20. So if you haven't seen a link to register for that, I will also be sure to include that on the podcast description. Oh, like man. Well, thank you both for joining. Thank you so much for having me. If you would like to learn more about immigration through investment, and how first pathway partners can assist you in achieving the American Dream by successfully navigating the EB five visa process, then please contact them directly online at www dot first pathway.com