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Wealth Management in Brazil 2009

Datamonitor
August 21, 2009
15 Pages - SKU: DFMN2429885

Abstract Table of Contents Search inside this report Related Reports

Countries covered: Brazil

Introduction

Brazil has never been an easy market for international wealth managers, and in the last 12 months it has become even tougher. Private banks need to appreciate the challenges that this market presents and understand where the strategic opportunities lie. This report provides this information, drawing on research and interviews and incorporating data from Datamonitor's Global Wealth Model.

Scope

Sizes, segments and forecasts the number of affluent invididuals across 10 liquid asset bands from USD50k
Primary research among domestic wealth managers provides insight into HNWs and the private banking market
Utilizes Datamonitor's proprietary Wealth Management Opportunity Index to score the attractiveness of the market

Highlights

Brazilians are very exposed to their domestic stock market because of their large equity and mutual fund holdings. In the years leading up to 2008, this positioning served them well, but last year crashing markets caused a dramatic contraction in the number of affluents in the country, reducing them by 55%.

In the wake of the market's falls, there was a rise in demand for more defensive products among Brazil's high net worths (HNWs), but at heart they remain risk loving individuals who favor fairly simple asset allocations. The country's HNWs are becoming more demanding of their wealth management service.

For international players, the onshore wealth management market in Brazil is difficult to penetrate and hard to compete in. Success requires a well-developed proposition, real points of differentiation and an intelligent plan for client acquisition. Service quality and excellent client information are two points of possible differentiation.

Reasons to Purchase

Understand Brazilian HNWs' attitudes and investment behaviour, and reasons for choosing/leaving their wealth service.
Gain insight into the competitive characteristics of the Brazil wealth management market, and learn the factors for success.
See how the Brazil wealth management market scores against Datamonitor's Opportunity Index.

Overview: Catalyst; Summary
Methodology
Executive Summary: 2008 was a very painful year for Brazil's investors, although the good times will resume from 2009 onwards; HNWs are still risk loving, but they are becoming more sophisticated and demanding; The wealth management market in Brazil is well-developed and competitive; International wealth managers need to treat this market cautiously and think hard about their differentiators; Table of Contents; Table of tables; Brazil's Wealth; Brazil's economy proved resilient right up to 2009 and should return to its high-growth ways in the coming years; Brazil's stock market was not as badly affected as other BRIC countries in 2008, and has come back strongly in 2009; Relatively high interest rates have bolstered Brazilians' wealth; The importance of equity in Brazilians' portfolios has grown rapidly over the past few years; In 2007, Brazilian investors had more onshore liquid assets in equities than in deposits; 2008 marked a painful year of losses for Brazil's wealthy, but 2009 will put them well on the road to recovery; The number of affluents in the country fell by 55% last year due to the sharp fall in the financial markets; Brazil's Wealth Management Market; It is becoming increasingly difficult for international wealth managers to enter and succeed in Brazil's wealth management market; The Wealth Management Opportunity Index; Wealth management market features; Range of products and services: -2; Level of consolidation: -2; Ease of market entry: -3; Level of international wealth management activity in the country: -2; Wealth management client characteristics; Level of use of onshore services: 2; Level of demand for high-quality service: 2
Appendix: Datamonitor's Wealth Management Opportunity Index; There are five key parameters when assessing a market for its wealth management potential; There are 18 components to the five key parameters of the wealth management opportunity index; Institutional factors; Economic variables; Wealth management market size; Wealth management market features; Wealth management client characteristics; Definitions; The drivers of growth in the wealthy population; Income growth (combined with inflation, changes in GDP by sector, household savings rates and debt levels); Investment returns (market capitalization, interest rates and bond yields); The following measures are not, in themselves, drivers of wealthy population growth; Market capitalization; GDP; The following measures are not drivers of wealthy population growth except under very restricted circumstances; Primary residence value growth; Inheritance
Methodology: Global Wealth Model; The UK sub-model; Global sub-model (for all other countries); Forecasting methodology; Continuous refinement to the understanding of liquid wealth distribution; Datamonitor's wealth numbers compared with other wealth numbers; Bibliography; Further reading; Ask the analyst; Datamonitor consulting; Disclaimer
List of Tables: Table 1: Financial assets of Brazilian retail investors; Table 2: Value of onshore liquid assets in Brazil in dollar bands ($bn); Table 3: Forecast value of onshore liquid assets in Brazil in dollar bands ($bn); Table 4: Number of individuals in Brazil in dollar bands (000s); Table 5: Forecast number of individuals in Brazil in dollar bands (000s); Table 6: Wealth Management Opportunity Index - Brazil; Table 7: Wealth Management Opportunity Index with values - Brazil; Table 8: Global ranking of assets under management (October 2008); Table 9: Distribution by fund type (October 2008); Table 10: Types of assets managed by the largest asset managers in Brazil; Table 11: Brazil's banks by nature, ownership and size (March 2009)
List of Figures: Figure 1: Growth in average nominal wages has occurred in a low inflationary environment; Figure 2: The stock markets of the BRIC countries have bounced back strongly in 2009; Figure 3: Interest rates have fallen sharply over the past few years, but do offer good returns relative to inflation; Figure 4: The 2008 fall in the stock market had serious consequences for the wealth of Brazilians; Figure 5: The relative proportion of equities held by Brazilian investors ballooned in 2007 and popped in 2008; Figure 6: Brazilians have embraced a number of different fund types; Figure 7: The Brazilian Real has strengthened against the US dollar of late; Figure 8: A number of factors point towards the likely movement of money back onshore

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