The Brazilian Central Bank has announced that it has narrowed its current account deficit since April 2010 as a result of increased exports and less money leaving the country. With development in the north-east offering expansion possibilities for Brazilian industry and an increasingly prosperous population led by an emerging middle class, wealth management in Brazil is an emerging opportunity.
Brazil has the largest economy in South America with well-developed agricultural, mining, manufacturing, and service industries. Despite experiencing two quarters of recession, GDP growth returned to positivity in 2010 based on an export-led revival.
A decade of improvements in security, infrastructure, and education (of which the first two are now in overdrive in preparation for the 2014 football World Cup) has led to an increased presence of multinational companies in Brazil. Alongside greater stabilization of the Brazilian economy and improved living standards, an emerging middle class has evolved, bringing new business to the airline industry, the technology industry (mostly in computing), and other industries traditionally linked to growing prosperity.
According to airline TAM, demand grew by 38.5% in April 2011. During the Holy Week, on April 25, TAM transported 136,000 people in a single day, the largest number of passengers transported on one day in the company's entire history. Even north-east Brazil, the poorer neighbor to the prosperous south, is emerging as a key component of the country's growth. Northern ports such as Pecem are being expanded to support larger ships that will benefit from shorter haulage times to the international markets that have driven the export-led economy.
As a result of the growing domestic market and an increasing number of retail banking clients requiring premium services, commercial banks, private banks, and asset managers are taking serious steps to expand their Brazilian operations. In March 2011, both Santander and Citibank announced plans to expand their private banking teams in Brazil. In the same month, Bank of America Merrill Lynch received a banking license to offer treasury services. In May 2011, Julius Baer acquired a 30% minority stake in GPS, which is the largest independent wealth manager in Brazil with $5bn assets under management (AUM).
According to the Association of Finance and Capital Markets Institutions in Brazil (ANBIMA), which represents 340 institutions, the number of private banking industry professionals with certified financial planner (CFP) qualifications increased by 73% from 160 in 2009 to 277 in 2010. The association also runs comoinvestir.com, a website dedicated to providing education and advice for individual investors, which has published numerous guides to the industry.
According to Datamonitor's Americas Wealth Markets Database 2010, the total value of all assets held in the affluent population in 2009 was $440.7bn. By 2010, it had increased by 19% to $525.6bn. The total value of all assets held is forecast to reach $751.8bn in 2014.
While inequality and lack of education are still major barriers to country-wide prosperity, the emergent middle class will provide extensive new opportunities for wealth managers looking to expand in Brazil.