LatAm Wealth Surge Seen Lasting

Private bankers, security firms and luxury goods retailers should brace for an uptick in business: LatAm wealth is rising at a healthy clip. Regional wealth grew by 13.6% to $3.1trn assets under management (AUM) in 2007, making it the fastest expansion globally in local currency terms, according to a survey by Boston Consulting Group (BCG). World average growth was just 4.9%, according to BCG. LatAm looks set to maintain a 10% average growth rate through 2012, BCG senior partner Jorge Becerra tells LatinFinance. There are now 286,000 LatAm households with more than $1m in AUM, up 15.8% year-on-year. Becerra adds that sustained economic and income growth are driving the move, helped by commodities industry growth and an increase in onshore private banking services. The emergence of a well paid professional class, new entrepreneurs and increased family wealth are also underpinning expansion. “We may be 5-10 years behind the US today, but developing rapidly,” says Becerra. “The trajectory for the next 5 years will continue to be around 10% sustained growth . . . it will continue to be above the global average,” he adds. Risks include the sustainability of the region’s resilience to external markets stress. Heightened demand for trust advisory and estate planning services highlights the level of sophistication now needed in the region by private bankers. From 2002-2007, the share of equity as a percentage of AUM more than doubled, says BGC. The surge comes from a low base: LatAm is the smallest wealth market measured by BCG and pales in comparison to the $39.2trn AUM in North America. Hedge funds should not get too excited. According to Becerra, private bankers are offering less hedge funds product to high net worth clients.