In this podcast, Blake interviews Neal Rubin, a financial advisor specializing in offshore asset protection trusts and offshore bank accounts. Neal is the managing director at Citi National Rockdale, a $60 billion SEC registered investment advisory firm.

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Blake:
Well, first of all, Neal, thank you for coming on today’s show. Glad to have you. The two of us have been working together for quite some time now, but this is our first chance to actually have a conversation live where prospective clients, as well as maybe some clients can watch as well. So, Neal is a financial advisor, he’s helped a few of my clients open up offshore bank accounts, but I’ll let you give a little bit of background on yourself, Neal, if you want to share a bit about your background, your company and the services you offer?

Neal:
Certainly, thanks. First of all, thanks so much for the opportunity, it’s been a pleasure working with you, and I’m really looking forward to having a detailed discussion with you about this business. So, I’m a managing director at Citi National Rockdale. We’re a $60 billion SEC registered investment advisory firm. I have a pretty unique practice within the firm, in that my focus, and it’s really been my focus for the past 18 years, is managing money for US people that have fully tax compliant offshore structures. Normally, pretty much in every case, those are offshore asset protection trusts. So, it’s very much a niche business. My team and I, as I said, we’ve been doing this for a long time now. We know and are able to open up accounts with offshore banks, we have four banks we currently work with, we pretty much know all the trustees that do this business, and what we help in is really a couple things. I think the first thing where we give assistance is, we help make this process much more noble for people, much more familiar by being a US registered investment advisory firm. That gives clients comfort to begin with the fact that we’re in the United States, regulated by US regulators, and we speak English as a first language. It’s easy for me to visit clients all over the country. And what we do for those individuals, like your clients, Blake, is we put together bespoke investment strategies for them that meet their unique risk return requirements. And one of the things people don’t realize when they think about offshore is, they can really have exactly the same portfolio that they would have in the states, offshore. So, if we have a client that’s very conservative maybe, and wants to be in all California municipal bonds, we can structure that portfolio for them. We can also have US equities, we can hold individual securities, we can hold mutual funds, we can hold ETFs. And so, what we do is really help people know that even though they’re setting up a structure, where they’re giving ownership of their assets to an offshore trustee, the money’s going to be managed by somebody in the US, that they can have contact with, that is used to dealing with them, and is like them. And that oftentimes makes a huge difference.

Blake:
But you are placing the money with Swiss banks, correct? Or with offshore banks. So, I know Switzerland is one of the jurisdictions you use, are there other jurisdictions you use outside the United States, other than Switzerland?

Neal:
There are great questions. So, Switzerland is our go-to jurisdiction. We hit Switzerland first, because it’s obviously not the US and it doesn’t fall within the jurisdictions of US courts. But the other great thing about Switzerland is pretty much everybody knows where it is, and they’re familiar with the country, and they know the banking system is very old and very well regulated. So that’s really where we started, but over time we’ve added banks, for various reasons. So right now, we have two banks in Switzerland, we have one bank in Liechtenstein, and we also actually have a bank in the Cook Islands.

Blake:
Okay

Neal:
So, there are three jurisdictions for banks that we deal with right now.

Blake:
Very good. And when clients are setting up asset protection trusts, my clients use pretty much exclusively the Cook Islands for where the trustee sits. Now we do use protectors in New Zealand as well as St. Kitts and Nevis where I mentioned I’m going later, later this week. And I do have relationships with people in Belize, and the Cayman Islands as well. Where are your clients? Where are you seeing other people use for the jurisdiction for the asset protection trust? Is it exclusive to the Cook Islands? Or are there other jurisdictions that you’ve seen as well?

Neal:
It’s not just the Cooks. The Cooks is a great jurisdiction, and I guess first of all, we’re agnostic when it comes to the jurisdiction, it’s really the attorney that is the expert in picking the jurisdiction. And we always go where our attorneys want to have their trusts, Cook Islands, very popular, Nevis, another very popular jurisdiction. And then we have, actually, some in Cayman. So those are the typical jurisdictions that we deal with, I’d say probably 80% of the trusts, though, are in the Cook Islands, where I’ve been, I’ve visited there, seven, eight times. Haven’t been there since the pandemic, it’s been tough to get there, but I’ve been there, I’ve met with all the trust companies, and we know them well.

Blake:
Okay, that’s good that you mentioned the Caymans, I’m actually planning a trip there in November, so I may reach out to you about some contacts as we get closer to November. So, my standard practice is, I will help a client set up a Cook Islands trust, and the next step in the process is opening up an offshore bank account, and we always do that through a registered investment advisor such as yourself. Typically, what I will do is give my clients the name of two investment advisors, that way the liability’s not on me, and that way they can compare and decide who they want to work with, who the best fit is for them. What is something a client should consider when vetting an investment advisor such as yourself?

Neal:
Well, you know, you probably want to deal with somebody who’s very well established and experienced in this particular area within investing. There’s certain nuances to it, that you want to make sure your investment advisor understands. You also, obviously, want to be able to deal with somebody that can open up an offshore custodial account. So, that’s sort of supercritical for the whole process. You should look at the regulatory background of the individual and the organization, that’s easy to do, make sure there’s somebody that you want to deal with that don’t have client issues. And then, I think you want to have somebody that listens, that understands your needs, that will create, again, a bespoke allocation. We have a very detailed process, where we have a client fill out a questionnaire so that we understand their unique risk return parameters. And no two of our portfolios look the same, they’ll have a lot of the same components, but they’re not going to be, sort of, cookie cutter. There are a lot of managers that will put you in an aggressive, moderate, or a low vol kind of allocation, but they’ll all be the same. I think, you know, dealing with an advisor that has significant resources is very helpful. We have, probably about 250+ people in our organization, we have people that cover equities, within that, they cover international, large cap, dividend strategies, mid small, we have a massive, fixed income desk. And, you know, when you look at investing these days, you really have to understand, not only the companies and we have analysts that deal specifically with the companies that we invest with that actually called the CFOs and the CEOs, but you need to understand the Fed and you need to understand geopolitics, and I’d also contend that you’re probably better off if you’re a US person and you lead a US life,` dealing with somebody in the US makes a huge difference. A lot of the portfolios that I’ve seen that have been structured by managers outside the US don’t really get the exposure that you’d really want in the US, and they’ll typically have significant allocations to things like gold and non-US Securities, which have really underperformed for at least the past five years.

Blake:
Thank you for all that, Neal. And there’s a handful of bankers in Switzerland to go after, or investment advisors in Switzerland, who you go after Cook Island trusts for asset protection business. But, the number of advisors I’ve come across, who are based in the United States that service US clients setting up Cook Islands trust wanting a Swiss bank account are far, far, fewer, that’s surely set you apart. How do your fees compare to the traditional US advisor as well as a Swiss advisor?

Neal:
Well, first of all, I think in terms of US advisors doing it, you’re looking at him, I think I might be the only person in the US that does this.

Blake:
You’re the only one that I’ve come across so far.

Neal:
I really think I’m the only one, it’s a real niche asset, or a niche market, excuse me, in terms of the fees, I’m not really experienced in the Swiss advisors, although if you put a gun to my head, I would think we’re going to be slightly less expensive than they are. In terms of domestic we have the same schedule, domestically that or, excuse me, offshore that we would domestically so there’s no additional cost for dealing with us to manage your money offshore.

Blake:
And you answer the question similar to how I answer the question when I ask how my prices compare, I don’t spend my time comparing myself to anybody other than myself. So Neal, a portion of my business, so my business is 100% asset protection focused, in some cases we’re utilizing Nevada asset protection for clients who fit the domestic model, and then a lot of the time we’re doing offshore trusts, as I mentioned, in the Cook Islands. But within the asset protection arena, and it’s a pretty small group of attorneys who work exclusively in asset protection. I’ve done my best to set myself off, set myself out as one who really specializes in crypto and digital assets. I’ve formed a blockchain Asset Protection Council, where I work with other, mainly attorneys who are interested in protecting their clients’ digital assets, for clients who have Bitcoin, Ethereum, other cryptocurrencies or digital assets. Do you have a way to offer them exposure to these types of investments?

Neal:
Sure. And that’s a great niche. And I really commend you for focusing on that, I think you’re clearly a thought leader amongst attorneys. Forget about asset protection attorneys, I think attorneys in general. So, that’s a great place to go. We’re sort of interesting in regard to our outlook as a firm with crypto. So just to sort of explain it a little bit as a firm, we don’t recommend crypto as an investment. So, if you listen to any of our investment calls, our CIO will basically say, not an asset class that we like, really similar to gold and silver and platinum, same, same sort of story. Having said that, I oversee a hedge fund that we have, that I’ve run since I think about 2006. And, in that strategy, we actually made a Bitcoin investment back in June of 2016, when I think Bitcoin, I think our first investment, Bitcoin was trading at about $562. And then we made another one at 800. And we’ve held on to the investment, we’ve stripped off pieces, we’ve realized about 22 and a half times our original investment, we still have a substantial stake there. Not as substantial as it was maybe back in November of last year, but still substantial. I still like it as an investment on keeping it in the strategy. And we get our exposure through greyscale. Or at least that’s where we did. And so, I know we can get theory of exposure there and a whole host of other Cryptos. So, if clients want that exposure in the portfolio, and they’re willing to go to the trustee to have the trustee approve it as an investment. That’s we do it through greyscale at this present time, and I would assume within a year to 18 months, you’re going to have ETFs that will allow you to get that exposure, probably through grayscale.

Blake:
I think so as well. And your company’s policy seems to echo what I hear from a lot of advisors, the head investment officers apprehensive but there’s still a few options for clients who are driven to that area. I think, and I believe it’s inevitable that we’re all going to get there. It is going to take some time for those who make the decisions to get more comfortable with crypto or accept that crypto is the way of the future.

Neal:
Right.

Blake:
So, I’ve got just two more questions for you right now, unless something else pops up with your answers. Walk us through a little bit of the process of opening up an offshore account within a Cook Islands trust, in terms of what type of KYC and background checks need to take place, as well as the timing, how long the client can expect it to take to open up an account.

Neal:
Yeah, great, great question, Blake. A lot of people really don’t realize all the work that goes into opening up an offshore account. And they think about opening up a domestic bank or brokerage account, which, you know, we do typically in a couple of days. That’s not the story with an offshore account. So, I guess the first thing I’d say, and I’m sure you say to your clients is, you really want to do this in advance of an issue. You want to be proactive in your planning and be prophylactic, a lot of people aren’t, and they come to the game too late. Having said that, if you are proactive, and you have somebody you refer to us, and they decide to come with us, there’s substantial KYC work that that needs to be done. So in our organization, currently, you have to go through what’s known as enhanced due diligence, which is significant know your client work, we asked for pretty basic information, name, address, how the money was earned, where the money is now, we’ll get a social security number, we’ll get a copy of passport, I’ll do an interview upfront with somebody, and that information all goes to our financial intelligence unit that has really, excuse me, very fulsome online capability to basically go back in history with somebody and see everything they’ve done or, you know, haven’t done just to make sure there’s no existing litigation, there’s nothing in their past that may have been an issue, and obviously, most importantly, you know, the whole KYC process in regards to source of funds to make sure that the source of funds isn’t from money laundering, or terrorism, or any of those things that the government is very much concerned about. So that process starts as soon as the prospect or the client gets approval to us in order to work with us. Simultaneously with that, I started on the whole investment process, we have a 12 page multiple choice questionnaire that I send to the client, I look for copies of existing statements, of their current positions, the client fills out that document, gets it back to me, I have a portfolio design team that I send that information to, they create three alternative portfolios that we believe fit the client’s unique risk return profile, then they run Monte Carlo simulations on those, and I sit down with the clients and go through those alternatives focusing on, really not so much return, as downside, because if you study money management at all, you pretty quickly realize that downside risk management is everything to clients. If you look at the whole emotional aspect of investing, that’s how most people manage their money. So, I work on that to create an allocation for them that we then memorialize into an investment policy statement.

Blake:
Okay

Neal:
That basically lays out the allocation as to how the money’s going to be managed, which is the most important thing you’re going to do for a client. It basically drives over 85% of the portfolio’s return, doesn’t have anything to do with whether we buy Microsoft or Starbucks or Costco, has everything to do with how we allocate the assets. And then simultaneously with that, my ops team is working with the custodial bank that’s been chosen, in order to start the account opening process. And the account is opened by the trustee, whether it’s in the Cook Islands or Nevis, or Cayman or wherever, Blake, you’ve decided that the trust should be housed. So, we’ve, you know, opened up hundreds of these and what we try to do is, we midwife it. So, we’re not the client, we can’t move money, we can’t open accounts, but what we can do is act as a go between the grantor and the trustee, in order to make sure all the information gets into the account opening documents, which are frankly voluminous. When I first started in this business 18 years ago, maybe they were 40 pages and eight different docs. Now, they’re probably 15 different docs, and they’re probably 400 pages. So, we make sure that the trustee fills out the paperwork properly, a PDF usually goes to the bank, the bank looks at the PDF, they usually have changes, goes back to the trustee, then the trustee sends the original, has to be sent by carrier, so it takes time. So, I always tell clients to get an account open. If your trust is set up already and registered, it’s going to take 45 to 60 days probably.

Blake:
Okay.

Neal:
That’s sort of the process.

Blake:
Okay. Well, Neal, thank you for all that information that was very valuable and valuable in detail. I don’t think that anybody else line it up all like that, and the more we can educate clients, from the beginning, the smoother the process is and managing the expectations, the name of the game.

Neal:
Yep.

Blake:
If somebody wants to get in contact with you, what’s the best way to get in contact with you, Neal?

Neal:
Feel free to either call me on my cell or text me? My number is 917-576-9428. If I can answer, I answer, if I can’t, I’ll get right back to you. Or you can email me, neal.rubin@cnr.com

Blake:
Neal, always a pleasure to chat with you. Thanks for being on the show. And I’m sure I’ll be reaching out to you and talking to you before too long. You have a great day.

Neal:
Thanks so much, Blake. Thanks for hosting me really appreciate it.

Blake:
My pleasure.

Neal:
Take care.