Overview 1
Catalyst 1
Summary 1
Methodology 1
Executive Summary 3
2008 was a very painful year for Brazil's investors, although the good times will resume from 2009 onwards 3
HNWs are still risk loving, but they are becoming more sophisticated and demanding 3
The wealth management market in Brazil is well-developed and competitive 3
International wealth managers need to treat this market cautiously and think hard about their differentiators 3
Table of Contents 5
Table of tables 6
Brazil's Wealth 7
Brazil's economy proved resilient right up to 2009 and should return to its high-growth ways in the coming years 7
Brazil's stock market was not as badly affected as other BRIC countries in 2008, and has come back strongly in 2009 8
Relatively high interest rates have bolstered Brazilians' wealth 9
The importance of equity in Brazilians' portfolios has grown rapidly over the past few years 10
In 2007, Brazilian investors had more onshore liquid assets in equities than in deposits 10
2008 marked a painful year of losses for Brazil's wealthy, but 2009 will put them well on the road to recovery 13
The number of affluents in the country fell by 55% last year due to the sharp fall in the financial markets 13
Brazil's Wealth Management Market 16
It is becoming increasingly difficult for international wealth managers to enter and succeed in Brazil's wealth management market 16
The Wealth Management Opportunity Index 16
Wealth management market features 20
Range of products and services: -2 20
Level of consolidation: -2 24
Ease of market entry: -3 26
Level of international wealth management activity in the country: -2 28
Wealth management client characteristics 29
Level of use of onshore services: 2 29
Level of demand for high-quality service: 2 32
Appendix 34
Datamonitor's Wealth Management Opportunity Index 34
There are five key parameters when assessing a market for its wealth management potential 34
There are 18 components to the five key parameters of the wealth management opportunity index 35
Institutional factors 35
Economic variables 35
Wealth management market size 36
Wealth management market features 36
Wealth management client characteristics 37
Definitions 38
The drivers of growth in the wealthy population 38
Income growth (combined with inflation, changes in GDP by sector, household savings rates and debt levels) 38
Investment returns (market capitalization, interest rates and bond yields) 38
The following measures are not, in themselves, drivers of wealthy population growth 38
Market capitalization 38
GDP 38
The following measures are not drivers of wealthy population growth except under very restricted circumstances 39
Primary residence value growth 39
Inheritance 39
Methodology 39
Global Wealth Model 39
The UK sub-model 39
Global sub-model (for all other countries) 39
Forecasting methodology 40
Continuous refinement to the understanding of liquid wealth distribution 40
Datamonitor's wealth numbers compared with other wealth numbers 40
Bibliography 41
Further reading 42
Ask the analyst 42
Datamonitor consulting 42
Disclaimer 43
List of Tables
Table 1: Financial assets of Brazilian retail investors 12
Table 2: Value of onshore liquid assets in Brazil in dollar bands ($bn) 13
Table 3: Forecast value of onshore liquid assets in Brazil in dollar bands ($bn) 14
Table 4: Number of individuals in Brazil in dollar bands (000s) 14
Table 5: Forecast number of individuals in Brazil in dollar bands (000s) 15
Table 6: Wealth Management Opportunity Index - Brazil 18
Table 7: Wealth Management Opportunity Index with values - Brazil 19
Table 8: Global ranking of assets under management (October 2008) 21
Table 9: Distribution by fund type (October 2008) 22
Table 10: Types of assets managed by the largest asset managers in Brazil 23
Table 11: Brazil's banks by nature, ownership and size (March 2009) 25
List of Figures
Figure 1: Growth in average nominal wages has occurred in a low inflationary environment 7
Figure 2: The stock markets of the BRIC countries have bounced back strongly in 2009 9
Figure 3: Interest rates have fallen sharply over the past few years, but do offer good returns relative to inflation 10
Figure 4: The 2008 fall in the stock market had serious consequences for the wealth of Brazilians 11
Figure 5: The relative proportion of equities held by Brazilian investors ballooned in 2007 and popped in 2008 12
Figure 6: Brazilians have embraced a number of different fund types 22
Figure 7: The Brazilian Real has strengthened against the US dollar of late 30
Figure 8: A number of factors point towards the likely movement of money back onshore 31