Both UBS Group AG
and Credit Suisse Group AG
increased their Brazilian wealth management staff by more than 10% over the past year, and are on the hunt for more additions to their teams as demand surges for financial advice and new investment vehicles in Brazil. Additionally, Swiss money manager Pictet Group
recently hired 10 people to cover Latin America from Zurich.
“It’s a real tsunami… You see many investors leaving the comfort zone of short-term, fixed income and going into equities, hedge funds – in Brazil and globally,” Sylvia Coutinho, head of Latin America private banking for Zurich-based UBS, said in an interview (Gulf Times
Interest in serving wealthy Brazilians was already surging before last week’s approval of pension reforms that advocates say will help balance the budget. Record-low interest rates have spurred many investors to switch out of traditional Treasury bonds and savings accounts in favour of more exotic offerings.
As reported by Gulf Times
, Brazil’s fund industry had net inflows of 205.7bn reais ($51bn) this year through September, almost three times the amount for the same period in 2018, according to Anbima, the capital markets association.
In 2017, UBS acquired Brazil’s biggest independent multifamily office, Consenso Investimentos
. At the time, the combined operation had about 30 billion reais in wealth under management locally.
“Clients today want proximity, so having a local presence is very important,” said UBS’s Coutinho, who’s also the firm’s CEO for Brazil.
Last year, UBS combined its two Latin America wealth management businesses into a single unit under Coutinho.
In August 2018, Credit Suisse
revamped its international wealth management division, creating seven divisions: including one Latin America-focused, and one focused solely on the Brazilian market. The bank expects the number of millionaires in Brazil to increase 23% by 2024, to 319,000.
“About $200 billion of wealth was brought into play in the past decade after governments in Argentina, Brazil, Colombia, Mexico and Chile allowed citizens to report undeclared assets held outside their home countries, imposing only minimal fines and adding new tax incentives. Most of the wealth declared – about $120bn – was from Argentines, followed by Brazilians, at roughly $50 billion” (Gulf Times
Unlike the case in Argentina, rich Brazilians tend to invest most of their liquid assets locally. Gulf Times
reports that the private banking business in Brazil accounts for roughly 1.2 trillion reais in assets, an 11% increase since the end of 2018, according to Anbima
Although Brazil’s economy continues to grow at a sluggish pace, the demand for wealth management services is increasing. Gross domestic product is expected to expand just 0.9% this year, according to estimates compiled by Bloomberg, less than the 1.1% rate in 2018 (Gulf Times
“There are many positive factors, such as the approval of social security reform and economic growth, with less interference from the state and the private sector taking more initiative,” Coutinho said.