Luciano Tavares, CEO and Founder of FinTech start-up Magnetis Investimentos, explains how his company is making wealth management accessible to more Brazilians, and why Brazil has become a dynamic FinTech hub.
Walk into Magnetis Investimentos’ headquarters in São Paulo, and you’ll find what many have come to expect from a FinTech start-up: a bright, open plan space buzzing with activity as employees tap away at their workstations. At one end of the office, a diverse group of casually-dressed Millennials mingles in a kitchen/recreation area fitted with comfy sofas, an old-school arcade video game, a chess board and an acoustic guitar propped up against the wall.
What matters to you?
This five-year-old start-up’s collegial atmosphere is palpable everywhere. Motivational quotes and mission statements line some of the walls. A large chalkboard invites employees on their coffee break to answer: ‘O que importa para você?’ (‘What matters to you?’ Coincidentally, Julius Baer’s own tagline prompts clients and prospects to ponder the same question. So it seems that FinTech start-ups and traditional wealth management firms do have something in common, after all). Among the responses: ‘Financial independence for all women!’ ‘Family’, ‘Teamwork’, ‘Giving voice to disadvantaged communities!’ And perhaps inspired by the kitchen setting, one jokester has added: ‘gaining weight together!’
If you’re tackling an interesting problem, having an amazing team is the difference between success or not.
Corporate culture is everything and Magnetis’ CEO Luciano Tavares is more than happy to elaborate on why it is so important to his firm: “If you’re tackling an interesting problem, as we are in Brazil, having an amazing team is the difference between success or not. So now more than ever, we focus on our people, on the team that we’re building, and on creating a great culture where these people can flourish.”
Making wealth management accessible
Similarly, Magnetis wants to make a positive impact on the lives of its clients. Loosely translated from Portuguese, its mission is to “impact people’s lives with unparalleled customer experience and technology so they can invest in what matters”. Having started his career at a traditional big bank, and later moved on to set up a hedge fund, what prompted Luciano to enter the tech world? “Less than one per cent of Brazilians have access to wealth management services. So why not use technology to make this more scalable and accessible to every Brazilian?”
Here’s how it works: Potential clients start by completing an online questionnaire. “It’s very important to understand the individual needs of each client, so that’s the building block for the rest of the process,” Luciano explains. Does the client wish to buy a car? Make a down payment on a home? Save for retirement? Or perhaps they’d like to live off their investment income? All of these questions help clients determine their financial goals, investment horizon and risk tolerance.
Less than 1% of Brazilians have access to wealth management services. So why not use technology to make this more scalable and accessible to every Brazilian?
Once financial objectives have been identified and risk profiles defined, Magnetis’ algorithms kick into gear and suggest a personalised fund of-of-funds portfolio for the client. And unlike banks and brokers, which currently provide the bulk of wealth management services to Brazilian investors, Magnetis does not receive any rebates or commissions from the products it recommends, ensuring that clients receive unbiased, independent advice. “Brazilians have for many, many years invested through their banks; they’re not familiar with having an independent, unbiased advisor helping them – yet,” he smiles.
From there, clients can invest directly online, monitor, and track their portfolios over time while the algorithms take care of portfolio optimisation, rebalancing and ensuring optimal allocation levels to meet the clients’ investment objectives.
The human touch
But it’s not all just robots and algorithms, either. A team of human financial advisors complements the automated portfolio construction service. “We use technology for the things that are easily automated – for example, optimising portfolios – and we use humans where technology is harder to automate or substitute.” Luciano explains. So financial advisors are on-hand to answer any questions every step of the way, provide personalised advice, or ease investors’ anxiety during market downturns.
According to Luciano, Magnetis’ clients are typically in their 30s and 40s, lead busy lives with little time to manage their own finances, and often don’t know quite where to begin when it comes to investing. This is where Magnetis’ commitment to financial education comes in. The company’s blog features investment tips, primers on a variety of financial instruments and asset classes, as well as commentary on the latest financial developments such as changes to interest rates. Its social media channels post weekly webcasts in which friendly, approachable hosts highlight the week’s main events, discuss the importance of diversification, or offer up ‘how to’ investment advice in an easily understandable manner. It’s both cheerful and informative without being patronising.
And true to its philosophy of ‘learning by doing’, the company’s interactive online simulation tools show clients how their investment returns are affected by making slight adjustments to basic parameters such as initial investment, monthly contributions to their accounts, asset allocation mix, or risk tolerance.
South America’s FinTech hub
But Magnetis isn’t the only FinTech that has found a measure of success in Brazil. According to Paulo Miguel, CIO at Julius Baer Family Office Brasil, “Due to the size of the country, and thanks to the Brazilian nature of embracing innovation, there is a vibrant ecosystem of venture capital, of FinTechs, and of investments in start-ups in various dynamic segments.” Credit cards, retail banking, and credit insurance are among the services offered by other digital finance firms in the country. When asked about what he believes sets Magnetis apart, Luciano is quick to respond: “I think we were the first FinTech company to really offer wealth management in a digital platform; so we were pioneers in that sense.”
Brazilians have a strong presence online. They’re also very eager to test new services. So this creates a great environment for FinTech to flourish.
So what makes Brazil such fertile ground for a growing FinTech industry? The country has a strong tradition of financial innovation: in order to remain competitive during the high-inflation environment of the 80s and 90s, Brazil’s banks had to adapt by developing new technologies. But its turbulent economic past characterised by years of inflation, hyperinflation, and high interest rates are just one part of the equation. “On top of that,” Luciano continues, “Brazilians have a strong presence online. They are very social and they use social media intensively. They’re also very eager to test new services. So this creates a great environment for FinTech to flourish.” And that’s precisely what Magnetis has done over the past five years.
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