Keats connolly and Associates Inc., a financial planning firm based in Phoenix, Ariz., but with a network of clients throughout Canada and the U.S. Sunbelt, has carved a profitable niche for itself by specializing in cross-border financial planning. Clients include Canadians who live, work and invest in the U.S., and Americans who do the same in Canada.

It’s a challenging specialty that few other firms have attempted to master because of the complexities of legal issues, tax codes and securities regulations in the two countries, as well as those of the tax treaty between the U.S. and Canada. Robert Keats, president of Keats Connelly, says the knowledge and skills involved in handling cross-border issues are difficult to acquire, but the challenge has kept a lot of competitors from cutting his grass.

“The knowledge set is daunting. But that’s exactly what you want in a niche,” he says. “You need a specialty that has barriers to entry. And the more difficult it is, the more defensible it is.”

Dan Richards, an industry consultant and president of Toronto-based Strategic Imperatives Ltd. , says targeting a narrow niche and developing superior expertise, as Keats Connelly has done, can be a successful branding strategy.

“Most advisors provide services similar to those of other advisors, so an excellent way of differentiating yourself is by ‘narrowcasting’,” says Richards. “That means defining yourself by with whom you work and becoming a specialist in the unique financial issues of a specific group.”

While Canada’s big chartered banks — particularly those with a U.S. presence — offer some advice in cross-border issues, Keats says, banks often approach him for consultation on some of their clients’ thornier cross-border financial challenges.

“We have more cross-border expertise than all the Canadian banks combined,” he says. “It’s a highly specialized niche, and banks focus on products and services that suit the masses.”

Keats, who was born and raised in Western Canada and who now holds both Canadian and U.S. citizenship, has honed his skills during more than 35 years of working on cross-border issues. In the mid-1970s, he was working in Calgary as a financial advisor. Many of his clients were U.S. citizens from Houston and Dallas employed in Alberta’s energy industry.

“These clients had a lot of cross-border issues and needed advice, so I started digging up the information,” Keats says.

Realizing there was also a need to help Canadians living in the U.S. with cross-border financial issues, he moved to Arizona in 1983 and worked as a consultant. He formed Keats Connelly in 1990 with an American partner, Tom Connelly, who has since retired from the firm.

“There’s a lack of people in the U.S. who know anything about Canada,” Keats says. “When I first came to the U.S., I knew a fair bit about cross-border issues. But there were no references or any kinds of guidelines to help me.”

DEFINITIVE BOOK

Keats took it upon himself to write the definitive book on the topic. Entitled The Border Guide, it has sold 70,000 copies since its first edition was published in 1991. Designed to help both Canadians and Americans conduct their financial affairs or make real estate transactions across their respective borders, it touches on a variety of topics, including exchange rate strategies, tax planning, non-resident estate planning, out-of-country medical coverage, advantages for small-business owners and social security. It also assists Canadians and Americans if they are moving from one country to another, or marrying a citizen of the other country.

“The book is designed as a guide, but it also brings in many new clients,” Keats says.

And to raise the firm’s profile even further, he frequently holds educational seminars in Canada and across the U.S. Sunbelt, advertising in local newspapers. Clients have also come to him from companies that transfer staff back and forth between their Canadian and U.S. operations, such as forest products firm Weyerhaeuser Corp.

Employees of such firms frequently run into cross-border issues with pensions and benefits. Even activities such as owning a vacation home in a non-resident country can pose complications when it comes to taxation and estate planning.

Half of the 12 senior financial planners at Keats Connelly have both Canadian and U.S. qualifications, including the certified financial planner designations of both countries. Keats expects to hire another six or seven advisors within two years, but says it is difficult to find advisors with cross-border expertise and qualifications.

@page_break@“There aren’t a lot of people with dual-country certification,” Keats says. “Not only do they need to write the exams to be certified, but they need to obtain continuing education credits.”

Keats Connelly has about 120 clients, of whom 45 are high net-worth, requiring a full range of financial services. Full-service clients are handled by a team of five, including a senior consultant with Canadian and U.S. certification, a “paraplanner” (junior planner), a tax expert, an investment advisor and a legal specialist. After a comprehensive analysis of each client’s needs, a flat annual fee is established. No fees are charged for assets under management or for sales transactions on investment products.

“Fees depend on the complexity of the situation and the value we can add. Our business model is that we establish a fee for services required in the first year or two of the relationship,” Keats says. “After that, it may simply be a maintenance fee for accounting and filing tax returns.”

He meets with clients once or twice a year, and travels frequently to Toronto, Calgary and Vancouver to meet clients based in Canada. He usually meets U.S.-based clients in Florida, Arizona or California, but will schedule meetings in spots in between while he is travelling.

Clients with investment accounts receive quarterly statements with the returns of the latest period. Statements also compare performance with a customized benchmark index de-signed to match the portfolio’s asset allocation. IE