Can anyone expand on this inability to have investments outside of registered retirement plans?” I have never heard of this.
If I had eight figures to manage, no matter where I was actually resident, they'd probably figure out how to deal with the bureaucracies on both sides of the ocean...
Anything I make on a non-retirement account has to be reported to the German tax authorities, too - and I'll probably have to pay German taxes on those gains when I pull money out of them. Germany taxes all income earned by its residents, no matter where the source, but if my husband (German citizen) were a US resident, they would not tax what he earned in the US.
It can be difficult to achieve but the optimal situation is to be a citizen of a minimal or tax-free country, reside in a separate country and do business or work in a third.
Treating countries/governments like companies that have to vie for your business is a perspective that helps protect oneself and family.
The problem is that the US has not agreed to disclose information back to other countries. Banks don't want to deal with the local consequences of that. It has nothing to do with FATCA.
Source: I do this for a living, and I have a great many contacts in banks all over the world.
Understanding PFICs enough to report them properly is bloody difficult. Once you know how to report those you have, you can do it yourself, but you most likely will not be reporting them to your best tax benefit, but instead in the way that is easiest to understand.
When I had to research them, after 6 or so years of not understanding I had to report them before realising a gain, it took me at least 2 weeks of research and that was with prior knowledge of some of the acronyms you come across. At that point I think I understand enough to report mine but who knows.
Iirc in my research I read a number of times that the IRS has been formally asked to clarify some parts but they haven't responded. And that PFICs are the purview of only a small handful of specialised IRS agents.