Portfolio managers struggle to cope with emerging market volatility affecting their investment strategies but, for financial advisory businesses, the challenges are even greater.
We have had a base in Rio de Janeiro since 2004 and have other offices across Latin America. Worldwide, we advise clients in 62 countries and handle more than $100m in assets under administration and management.
We are certainly not deterred by market ups and downs; in fact, we are considering expansion with a regional hub to serve our growing client base in Africa and the Middle East. We have had more than 20 years of dealing with the uncertainties presented by fast-growing markets with as yet undeveloped infrastructure.
Handling uncertainty
If you want to advise clients effectively, there is no point in talking down the associated risks. For example, Brazil is presently in a serious situation, caught in a spiral of economic chaos. The currency is around four Brazillian real to the dollar at the time of writing, where a little more than two years ago it was at 1.6 real. We have to deal with that, operationally and financially, with resilience, expertise and consistency.
Global Index International has always benefited from personal recommendation but, in uncertain times, reputation is everything. In boom years, everyone is a risk-taker. No one talks about safe havens but, when things get rough, it is all about who you know and trust.
Consistency in how the company deals with its stakeholders, including clients, service providers and regulators, is key.
Resilience is not just about avoiding business risks but being able to retain a long-term outlook through short-term upheaval. The macroeconomic backdrop obviously affects our business. Day to day, costs remain high. Clients from the mining and energy corporations are not so evident now but there are other opportunities in sectors such as healthcare, which are less vulnerable to economic cycles. Above all, we aim to develop relationships for the long term, not just for immediate deals.
Analysing risk
Resilience also means being able to adjust quickly, anticipate and analyse sources of risk. We cannot avoid the fact that most commodity prices have been in freefall, which leads to massively weakened currencies.
Yet there is never a 100% collapse. Countries such as Colombia, Chile and even some African countries remain attractive and stable over the long term. Even in Brazil, exporters of certain products are now doing well, where they previously battled a strengthening real. You can be bold and careful.
