Ingredients for sustained wealth creation

Latin America has been growing at a strong pace over the last years allowing for sustained periods of political stability. Governments have not only wisely used the windfall profits of the commodity super cycle to strengthen their financial position; they have also driven institutional and socio-economic change. A more business-friendly environment as well as checks and balances on governmental institutions continue to be established. This allows for a broader participation by the increasingly educated and entrepreneurial population, a precondition for sustained growth. Thus, the ingredients necessary to reveal the region’s full potential for wealth creation are provided for.

Fundamental shifts within the wealth management landscape

Latin American high net worth individuals (HNWIs) are on average far wealthier than those in other regions. The wealth management industry servicing this clientele is changing, evidenced by a shifting landscape of market participants, the drive towards localisation, the rise of transparency, and the renewed role of offshore banking. Consequently, this will accelerate the demand for a refined HNWI service offering, focused on professionalism, accessibility, and a sophisticated understanding of client needs and circumstances. In light of this new environment, financial institutions such as dedicated private banks and professional external asset managers – if committed to adapting accordingly – will thrive.

Evolving investment behaviour

Latin American investors have become younger and more sophisticated over the past decades, resulting in an increasing risk appetite and a more diversified portfolio to achieve investment objectives. Latin American economies, at the same time, are more integrated into the global economy today than ever before and thus more exposed to international economic cycles and global social trends. With total wealth in the region set to continue to grow, heightened exposure to external shocks and increased investor sophistication will lead to new investment behaviours. This has been prominently highlighted most recently by Argentina’s technical default. The growing middle classes are forced to think beyond their immediate consumption needs and to re-evaluate notions of saving, wealth protection, investment preferences and allocations, while considering systematic risks amongst others.

Further information

Are you interested in learning more about the Julius Baer Industry Report: Latin America? Your relationship manager would be delighted to provide you with more detailed information.