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Wealth in Brazil: HNW Investors: Understanding HNW investors and wealth management strategies

Published: Jun 16, 2016 | Pages: 43 | Publisher: Verdict Financial | Industry: Wealth Management | Report Format: Electronic (PDF)

The majority of wealth in Brazil originates from the construction and finance industries, and can be attributed to a range of sources. These investors are confident enough to deal with their financial affairs, but to gain access to sophisticated products and achieve better returns they opt for management services. Investment portfolios are built around cash and bonds, but it is expected that alternative holdings will continue to gain importance.

Key Findings

- 55.3% of Brazilian HNW wealth can be attributed to earned income or first-generation entrepreneurship.
- As Brazil offers a wide range of sectors in which to invest, it is expected that HNW expats will continue to allocate a portion of their wealth to opportunities in Brazil.
- Access to more sophisticated investment products is the number one reason Brazilian HNW clients opt to have their wealth professionally managed, while 22.4% expect better returns though advisors.
- A noteworthy 22% of HNW client portfolios are allocated into alternatives. Demand is expected to increase along with the investment opportunities offered by multimercados.
- Among planning services, financial planning shows the strongest demand. It is expected that inheritance and pension planning will experience strong demand in the next two years, and as such wealth managers will do well to provide a complete suite of services.


Verdict Financials Wealth in Brazil: HNW Investors report analyzes the investing preferences and portfolio allocation of Brazilian HNW investors. The report is based on our proprietary Global Wealth Managers Survey.

Specifically the report:

- Profiles the average Brazilian HNW investor in terms of their demographics and analyzes the expat opportunity in Brazil.
- Analyzes which wealth management mandates are preferred among Brazilian HNW investors and how demand will develop looking forward.
- Examines the allocation of Brazilian HNW investors portfolios into different asset classes and how the allocation is expected to develop in the future.
- Analyzes product and service demand among Brazilian HNW investors.

Reasons To Buy

- Develop and enhance your client targeting strategies using our data on HNW profiles and sources of wealth.
- Give your marketing strategies the edge required and capture new clients using insights from our data on HNW investors drivers for seeking investment advice vs. self-directing.
- Tailor your investment product portfolio to match current and future demand for different asset classes among HNW individuals.
- Develop your service proposition to match the service and product demand expressed by Brazilian HNW investors and react proactively to the forecasted change in demand.
 Table of Contents

Brazilian HNW clients take a proactive approach to wealth management
Key findings
Critical success factors

The main source of Brazilian HNW wealth is earned income
A diversified market commands a focus on a range of wealth sources
A diversified market commands a focus on a range of wealth sources
Brazilian HNW managers should target expats within Europe
Expats account for 4.3% of the Brazilian HNW population
The largest proportion of HNW expats originate from the US and Mexico
Brazil to host investor meetings to widen private investment opportunities
HNW expats invest in Brazil for better opportunities and greater control over investments

Brazilian HNW individuals want to be involved in managing their wealth
Access to exclusive products motivates HNW investors to seek out wealth management services
Nearly half of Brazil's HNW wealth is held in advisory mandates
Wealth managers experience the greatest demand for execution-only mandates
Demand for discretionary asset management is expected to increase the most
70.9% of wealth managers expect demand for discretionary asset management to increase
Brazilian HNW clients are confident in taking the reins on wealth management

The majority of Brazilian HNW investors expect demand to increase for alternative investments
Cash and bonds dominate HNW portfolios
Brazilian HNW individuals hold 17% of their wealth in equities
27% of HNW client portfolios are allocated into bond investments
Cash is the most common investment option for Brazilian HNW investors
A minimal proportion of Brazilian HNW client portfolios is invested in property
Demand for alternative investments is expected to grow
Commodity investments are kept to a minimum, but are expected to grow in demand

Financial planning services are essential for Brazilian wealth managers
Wealth managers are most likely to experience strong demand for financial planning
Demand for planning services is expected to increase in the next two years
Investment property advice is more prevalent among Brazilian HNW investors
Tax planning is not considered to be an in-demand service among Brazilian clients
Tax planning services will become a focal point of wealth management services

Abbreviations and acronyms
Liquid assets
Verdict Financial's 2015 Global Wealth Managers Survey
Verdict Financial's 2014 Global Wealth Managers Survey
Further reading
About Verdict Financial
List of Chart

Figure 1: HNW wealth can be attributed to a range of sources
Figure 2: More than 20% of HNW clients generate wealth through construction
Figure 3: More than half of HNW expat clients are classified as short- to medium-term residents
Figure 4: Nubank secured $53m in credit lines from Goldman Sachs
Figure 5: Nearly half of Brazil's HNW expat population are from Mexico or the US
Figure 6: Better opportunities and fear of insufficient control motivate expat clients to invest in Brazil
Figure 7: HNW clients expect access to exclusive investment options and better returns by using professional wealth management services
Figure 8: 28.6% of Brazilian HNW clients invest in execution-only mandates
Figure 9: Advisory asset management experiences very weak demand from HNW clients
Figure 10: Discretionary mandates will see the largest demand increase over the next two years
Figure 11: Self-confidence and lack of trust lead HNW clients to self-direct their portfolios
Figure 12: Almost one third of HNW client portfolios are allocated into cash investments
Figure 13: The majority of HNW investors prefer equity funds over direct holdings
Figure 14: Risk aversion is the main driver for HNW clients investing in equity funds
Figure 15: An in-depth look at bond holdings shows that 47.3% are kept in direct government bonds
Figure 16: Four times as many wealth managers expect bond demand to increase than decrease in the future
Figure 17: The vast majority of Brazil's HNW cash holdings are allocated to money market funds or local currency deposits
Figure 18: Risk aversion is the main driver for direct holdings and funds of cash
Figure 19: Property holdings are nearly equally allocated among direct property, ETPs, and funds
Figure 20: 48% of wealth managers expect demand for property to increase
Figure 21: Hedge funds are the main investment for alternatives
Figure 22: Almost 70% of wealth managers expect demand for alternatives to increase
Figure 23: BTG Pactual offers an international hedge fund to HNW investors
Figure 24: ETPs and commodity funds account for the largest proportions of commodity investments
Figure 25: The main driver for commodity funds is risk aversion
Figure 26: Inheritance planning experiences the least demand from Brazilian HNW clients
Figure 27: Notable increases in demand across all planning services are expected
Figure 28: 86.3% of wealth managers experience very weak demand for tax planning services
Figure 29: PKF offers tax advice and services for clients around the world
Figure 30: Over the next two years demand for tax planning will increase significantly 

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