By Ivan Castaño

Brazil’s wealth management business is growing by leaps and bounds as banks and family offices fiercely compete to capitalize on the country’s rising prosperity. Assets under management in this sector are expected to reach a staggering $700 billion plus over the next year.

Yet so far, this new affluent segment is sticking to familiar investments close to home rather than venturing into markets abroad. This should be a boon for the country’s developing credit markets as well as stocks.

The growth of the wealth management business is apparent to any visitor coming to Brazil. Strolling on São Paulo’s fashionable Paulista Avenue these days, one can’t help but notice how many banks are promoting their Premiere banking services catering to the newly minted rich.

Brazil has been generating 19 millionaires a day since 2007, and that trend is likely to maintain its momentum well into the future as Latin America’s largest economy continues to deliver comparatively healthy GDP growth, with forecasts topping 4% annually over the next few years. 

Against that backdrop, wealth management houses are scrambling to attract new clients, or, as one banker put it, the new “affluent” segment of citizens holding $1 million-$3 million in their bank accounts.


According to Emerson Pieri, head of Latin American wealth management for Haliwell Bank, there’s no better time for wealth management banks to do business in Brazil. He expects assets under management in this sector to grow a whopping 28% this year to $760 billion, and by a similar rate in 2013.

That sum will be largely focused on onshore investments, which should total some $500 billion. The other $260 billion will be held in offshore accounts, Pieri forecasts.

The numbers are well above growth estimates for Latin America overall. Manuel Becerra, an industry consultant with Boston Consulting Group, forecasts that the region’s wealth management sector will grow by a comparatively smaller 9% a year by 2015.

“Brazilians are making a lot of money and investing a lot inside the country but also outside,” Pieri says, estimating banks’ managed offshore funds will hit $300 billion in 2013. “They [Brazilians] are buying properties and companies [both through equity stakes and outright acquisitions] and putting some of that money into wealth management accounts.”

Banks Compete

The 19 millionaires-a-day figure includes individuals with $1 million-$5 million reais ($550,000-$2.8 million), according to Haliwell research. Pieri said this affluent segment, made up of newly rich executives that have amassed fortunes from fast-growing businesses or real-estate investments, is the most coveted by private banks. 

Brazil has 137,000 millionaires and some 30 billionaires, with 70% of the country’s wealth concentrated in São Paulo and Rio de Janerio, Pieri notes.

“These people are making more than 500,000 reais a year and have been doing so for the past four to five years,” ever since Brazilian wealth began to grow on the back of a booming economy and increased consumerism, adds Pieri. “Most of them already have $1 million reais and they want to grow their money.”

On top of a burgeoning clientele, private banks are also making higher profits in Brazil. For clients holding $1 million-$3 million in a wealth management account, banks make 2.1%-2.8% in annual fees, up from 1% to 1.5% in other emerging or developed markets, Pieri reveals.

“Banks are just starting to offer these services, and Brazilians are willing to pay high prices for sophisticated investment products,” he says. However, he points out that when competition increases in two to three years, bank fees will likely fall to approach developed-market levels. 

According to Pieri, four banks control 50% of Brazil’s private banking market, including Banco do Brasil, Itaú, Bradesco and Santander, in order of market share. Citibank and Goldman Sachs are also competing fiercely in the market, looking to win customers interested in offshore investing. 


In the super-rich segment, where individuals can have fortunes ranging from $20 million-$30 million, JP Morgan, Lloyds Bank and Credit Suisse rule the market, industry observers say. However, they point out that the super-rich segment is only growing 5% a year. Despite this, Flavio Souza, CEO of Banco Itaú Europa, says Brazilian banks will likely dominate the market in a few years.

He claims several European banks have exited the market in recent months, generating exciting growth opportunities for domestic institutions. “Local players are growing a lot as they move to take the space left by international competitors,” Souza says, adding that some banks, including Itaú, are also looking to become regional private banks. 

Itaú recently acquired HSBC’s premiere banking operations in Chile, and it is looking to purchase other European bank assets in the region, Souza says. Itaú is also moving to bulk up in Mexico, Chile, Colombia and Peru. In Latin America, the Brazilian bank already commands some 25% of the private banking market, according to Souza. 

Family Offices

Multi-family and family offices are also keen to grow in Brazil’s wealth management sector and are posing a formidable challenge to private banks.

Claudio Mifano, executive director at Brazilian multi-family office Claritas Wealth Management, says many wealthy families in Latin America are frustrated with private bank managers’ need to satisfy their institutions’ “sell side” requirements, which aren’t always in line with theirs.

“Clients have realized that with a bank, they are more tied to what it wants to do, to buying its products and following its interests,” he argues. “With us, they don’t have to worry about any of this. We give them a much wider array of wealth-creation choices.”

Of course, family offices must deposit their clients’ money somewhere, so they are working with private banks to do this, Mifano adds. In turn, private banks are offering more services to family offices, even acquiring them.

Observers expect these alliances, as well as M&A activity, to increase as private banks struggle to keep family offices on their side or work to eliminate competitors.

Nevertheless, bankers says multi-family and family wealth boutiques are poised for strong growth and could account for 20% of Brazil and Latin America’s wealth management sector by 2015, up from 10% now, say observers.

Sticking Close to Home

For now, wealth managers in Brazil are still investing in local assets as opposed to seeking alternatives abroad, with one banker noting that Brazil’s local market can comfortably absorb the $500 billion in projected AUM growth.

“Brazil is generating tremendous wealth,” the banker says. “It’s true that most onshore investments are in fixed income but a lot of money is also going into the stock market where investors are making money.”

Apart from a home buying frenzy, people are also investing in REIT vehicles and diversified hedge funds called multimercados, which are managed by banks like Credit Suisse and BTG Pactual, he says. 

“The wealthy are looking at Brazil in the following way: ‘If you look outside, why exchange the opportunities you have in Brazil? The outside world is full of uncertainty. Why get out when everyone is trying to get in?’”

According to Mifano, 75% of Brazilian wealth is invested in government and corporate bonds, 15% in hedge funds and the rest in the stock market. He also says real-estate investments and REIT funds are becoming popular investment instruments. 

Even though many large Brazilian corporates have been raising US dollar bonds recently, Mifano notes Brazilians are generally not interested in this paper.

“Brazilian bonds pay much more than other BRIC bonds,” he says. “In absolute terms, Brazilians’ participation in foreign bonds may be increasing because total wealth is booming, but in relative terms, I don’t think there is much growth.” LF