The Latin American wealth market has become an area of focus for many firms over the last five years.
The increase of wealth in the region has seen more and more companies open offices in countries like Brazil and Uruguay – but LatAm is very big and broad.
Thiago Frazao, limited partner and head of LatAm wealth management at Mirabaud, told International Adviser that it is “important to distinguish that there’s several markets within LatAm that have different cultures”.
“Brazil is often referred to as the China of the continent by Argentinians, Uruguayans and Chileans because of the size and 220 million population,” he said. “It’s an extremely large country geographically speaking in terms of size, very diversified from north to south as well, with different subcultures within the country.
“That is one of the main markets for ourselves. It’s the main wealth management and asset management market in Latin America today. Then you have Argentina, which was historically also an extremely important country for wealth management for banks, mainly in Switzerland and the US.
“Then the other markets within LatAm would be Mexico, which has its own idiosyncrasies. It’s a market that for us hasn’t been a core, even though we do have clients there, but it’s one that would require a different approach than Brazil and Argentina do.
“Other countries in South America that are worth looking into is Peru, which today has more millionaires than Argentina. It’s a country that has seen consistent economic growth over the past 20 years, much more consistent than Brazil and Argentina.
“It has also become an interesting market for wealth managers. It’s much smaller, obviously in size, even though they have a lot of millionaires. It’s a much more boutique country to explore then the likes of Brazil and Argentina.”
Entering LatAm
Frazao has warned wealth firms looking to enter LatAm to not create an operation like a European or US hub.
“You have seen a lot of foreign banks go into Brazil in the past 20 or 30 years,” he said. “They either don’t embrace the culture, or they try to impose too much of a European or American style business culture in the country and it doesn’t work.
“You need to adapt to the country as much as possible. You have to go as much local as you can. If you really want to have a presence in South America and be a player in that market, you need to be in the long run. You have to have a physical presence there, which is what why we have pushed in both Argentina and Brazil with local offices.”
One of the reasons why a European or US approach may not work is because wealth in LatAm is “usually newer”, Frazao added.
“You have the new rich phenomenon, which is much more pronounced perhaps in Brazil than it is in Europe,” he said. “As a bank, we’re right now at the seventh generation of the family that’s managing money for our clients.
“It’s difficult to go seven generations in a place like Brazil, as you might see second generation or third generation. Whether it’s political or economic, it’s more difficult for wealth to be transmitted from one generation to the next than in Europe.”
