SPECIAL REPORT:
LATIN AMERICA
Contents
THE ADVISERS’ VIEW
Video: We visit AIVA, deVere, Supra and Holborn Assets
INTRODUCTION
Searching for safe havens
THE INDUSTRY VIEW
Video: We speak to Hansard, Investors Trust and RL360
REGIONAL OVERVIEW
THE BIG INTERVIEW
We meet Elizebeth Rey, CEO of AIVA at their Montevideo HQ
Argentina’s economic crisis boosts Uruguay’s wealth management
Reflections on a burgeoning but volatile financial services world
INTRODUCTION
Searching for safe havens
Crossing the smooth waters of the estuary located between the cities of Buenos Aires (Argentina) and Montevideo (Uruguay) – which is formed by the convergence two rivers: the Paraná and the Uruguay and meets the Atlantic Ocean – may only take an hour so on a ferry.
Yet the gulf between the financial fortunes of these neighbouring countries is perhaps as vast as the ocean that the river flows into.
When International Investment visited Montevideo in Uruguay and Buenos Aires across a week this summer, there was significant difference financially to be seen between the two cities, with cheaper hotels, beer and food in Buenos Aires for those converting pounds into pesos a welcome surprise. Good for the tourists; not so much for the Argentinians.
Near my hotel in the San Telmo district, I viewed the masses of side street currency convertors shouting “Cambio, cambio!”, around the Calle Florida shopping street in the commercial district of Buenos Aires, failing to understand why passers-by might want to change their money via the black market.
However, as the Argentine government has recently implemented strict currency controls in a bid to stifle demand for foreign currency that could strip the Argentinian central bank of its low reserves and deepen its ongoing debt crisis, things have become a little clearer.
Argentine President Mauricio Macri removed such currency controls days after taking power in December 2015 in a move to stabilise the currency market, with multiple exchange rates gaps of up to 50% between the official and black market rates at the time.
This re-imposition of controls by Macri – who is expected to lose out to rival Alberto Fernández in the presidential elections in October – is a bad sign with Fernández even tougher on currency. As such those street currency convertors shouting around the Calle Florida look set for a resurgence in business.
How does this translates into the financial advice world? It perhaps serves to heighten the ongoing demand for offshore protections of investments and savings amid fluctuation of fortunes of not just Argentina, but most Latin American governments.
From the middle classes to the high-net worths across this vast Latin American region, the need for both products and advice is on the rise.
In this special report we bring the news and views from on the ground. We visited the offices of RL360 to conduct a video interview with Nicholas Tiscornia, sales manager Latin America; and, also in Montevideo, we met with Gustavo Otero, head of distribution Latin America, Investors Trust to bring you another exclusive video report.
We also filmed Hansard’s global sales head Graham Morrall to get his view on the region.
A further focus on Argentina’s and Uruguay’s financial fortunes comes via a feature form our correspondent Pedro Gonçalves
On the advisory side in this extensive report, we spoke to Holborn Assets as it weighs up further expansion into the region and met with AIVA in Montevideo to bring you the Big Interview with CEO Elizabeth Rey in what is the company’s 25th anniversary year.
We also and visited the offices of Supra Brokers in Buenos Aires where Robert Parra, President & Founder of the company hails from.
International Investment takes great pride in bringing you the interviews, video and features within these special reports direct from the regions and we thank our sponsors and you, our readers and viewers, for the ongoing support.
Gary Robinson, head of video & ezines, International Investment.
“From the middle classes to the high-net worths across this vast Latin American region, the need for both products and advice is on the rise”
VIDEO: THE ADVISERS’ VIEW
Bridging the advice gap
From the middle classes to the high-net worths across this vast Latin American region, the need for both products and advice is on the rise.
In the videos right, we look at the biggest names in the international advisory world visiting the offices of Supra Brokers in Buenos Aires where Robert Parra, President & Founder of the company hails from.
And we spoke to Holborn Assets as it weighs up further expansion into the region. We also spoke with Nigel Green, CEO and founder of DeVere Group, who, under the Acuma deVere brand relaunched into Lat AM last year with a new Mexico City base ahead of a push throughout the region.
And in our main video above, we met with Aiva CEO Elizabeth Rey in what is the company’s 25th anniversary year.
With offices in Uruguay and Miami, Aiva serves more than 30,000 clients and runs more than $3bn in assets, wealth management solutions for affluent and high-net-worth clients in Latin America and the Caribbean.
In 2017, the Old Mutual group agreed to sell its Latin American businesses, including Aiva, Old Mutual Colombia and Old Mutual Mexico, to CMIG International, a Chinese group based in Singapore.
In the last 12 months as Aiva marked 25 years of experience, Elizabeth Rey, Chief Executive Officer at Aiva has been spearheading a series of fresh initiatives in the region. International Investment visted Aiva at their Montevideo HQ to find out more.
“With reference to our operations in Hong Kong we have actually been relatively unaffected. Our clients are primarily made up of HNW expatriates whose targets and ambitions have not changed and they remain very much in need of our services”
Robert Parra, founder and CEO of Supra Brokers
Riyad Adamou, Holborn Assets
Nigel Green, founder and CEO of DeVere Group
Riyad Adamou, chief commerial officer, Holborn Assets
In these videos four of the international advisory world's biggest names discuss what makes their firms different, starting with Elizabeth Rey, Chief Executive Officer at Aiva
VIDEO: THE INDUSTRY'S VIEW
The road to financial success
As advisers rush to meet the growing demand of, we spoke to some of the product providers that are bringing cross-border solutions to meet client needs for investment, insurance and savings.
We visited the Montevideo offices of Gustavo Otero, head of distribution Latin America, Investors Trust, as the firm continues its rise across the region’s southern cone.
Also in Montevideo, we met with RL360’s Nicholas Tiscornia, sales manager Latin America, who proves that despite the distance, the team still can feel a strong support from the rest of the RL360 family across continents in the company’s base on the Isle of Man.
Staying on the island theme, we also filmed with Hansard’s global sales head Graham Morrall to get his view on why this vast region is so important to the Isle of Man-headquarterd financial services company.
NEXT STEPS
THE OPPORTUNITY
Nicholas Tiscornia, sales manager Latin America, RL360
Investors Trust’s Gustavo Otero, head of distribution Latin America
Graham Morrall, Hansard’s global sales head
REGIONAL OVERVIEW
New partners
Argentina’s deepening crisis is boosting the wealth management industry in neighbouring Uruguay.
The former’s loss of domestic and international confidence has resulted in a rapidly slowing economy, one of the world highest inflation rates in the world – running at more than 54% – and short-term interest rates in excess of 70%.
Argentina has also seen its peso lose half its value and employment soar, sparking protests in the streets of Buenos Aires amid a food crisis.
The country’s central bank announced further currency controls in an effort to tame speculation and stem a spiraling debt crisis in Latin America’s third largest economy.
Under the new measures, anyone purchasing foreign currency must present a sworn oath stating he will wait at least five days before using it to purchase bonds.
President Mauricio Macri’s decision to implement controls follows his crushing defeat in the August 11 primary elections to opposition candidate Alberto Fernandez. Left-wing Fernandez seems almost certain to win the October election, bringing with him Cristina Fernandez de Kirchner, the former president who allowed Argentina to default in 2014, as his vice-president.
The sharp turnaround in Macri’s fortune has scared investors and sent bonds, stocks and the peso currency plummeting on market fears over a potential return to the interventionist policies of Kirchner’s previous government.
AN OPPORTUNITY FOR URUGUAY
The currency crisis is causing wealthy Argentinians to move their millions across the Río de la Plata to Uruguay, giving the wealth management sector in that country a renewed push.
“For generations, Uruguay served as an offshore haven for Argentines seeking to protect their saving from high taxes and periodic financial crisis back home,” Juan Jose Varela, head of Montevideo-based firm Gletir Corredor de Bolsa told Bloomberg.
“Many clients who were thinking about going to local institutions in Argentina have stayed with us,” he added.
The financial crisis in Buenos Aires could give a fatal blow to Argentina’s offshore advisory industry. Under Macri, the market regulator, Comisión Nacional de Valores (CNV) created AAGI licenses, which allowed local advisers to manage both onshore and offshore assets.
The previous framework made offshore advisory illegal and the new licenses were seen as a way to inspire wealth managers to look again at Argentina’s wealth space.
However, the bureaucracy involved in obtaining a license – to date only two firms have secured an AAGI – the strict compliance requirements and higher taxes advisers would have to pay in Argentine have pushed many firms and bankers to settle in Montevideo.
Geneva-based Mirabaud Group obtained authorisations from the Central Bank of Uruguay to open two wealth management subsidiaries. Both located in Montevideo, Mirabaud Advisory (Uruguay) SA offers Mirabaud's services to local clients, while Mirabaud International Advisory (Uruguay) SA provides services to clients from other Latin American countries.
Last year, RL360 continued its Latin America expansion with the addition of a new office in Montevideo, Uruguay. The move was seen as a show of confidence for the potential growth in the region.
Wealth manager BiscayneCapital opened a new office in Montevideo, UY, as part of its growth strategy. Also, ex-Heritage banker Federico Inciarte Sánchez and attorney Carlos Ruiz Lapuente launched advisory firm Radix Wealth Care in Montevideo.
DON’T CRY FOR ME ARGENTINA
As investors flee the country and banks such as Goldman Sachs and Barclays have revised down their bets on the economic outlook, the current administration was forced to seek to pacify the markets with a re-profiling of the nation’s debt, price freezes, minimum wage hikes and even capital and currency controls.
Argentina was also pushed into asking for help to the International Monetary Fund (IMF). It is the 22nd time in the last 60 years that Buenos Aires seeks help from the IMF, making Argentina a record holder.
In June 2018, it secured a $50bn loan, the largest loan ever granted by the IMF. With it came conditions, in the form of sweeping austerity measures.
Macri had to slash government spending and reduce subsidies for water, electricity and heating gas to meet deficit targets agreed with the IMF. Higher utility costs soon meant higher prices and lower consumer spending.
Something that did not sit well with the working population used to a previous free-spending populist government and is one of the reasons behind the government’s first defeat in the August elections.
Markets went into a tailspin amid fears that the October elections will result in a return to populism, which would violate the IMF deal and could spark yet another debt restructuring.
“As in Agatha Christie’s Murder on the Orient Express, almost everyone involved has had a hand in Argentina’s ongoing economic and financial debacle, and all are victims themselves, having suffered reputational harm and, in some cases, financial losses,” said Mohamed El-Erian, chief economic adviser at Allianz.
“Yet those costs pale in comparison to what the Argentine people will face if their government does not move quickly – in cooperation with private creditors and the IMF – to reverse the economic and financial deterioration,” he added.
BUENOS AIRES SLAMMED BY DOUBLE DOWNGRADE
Standard & Poor’s cut its rating on Argentina’s creditworthiness further into junk bond territory as it judged the country to have defaulted on its debts again, after Buenos Aires announced it was extending the maturity of several of its government bonds.
S&P said this amounted to a default, making it the ninth time Argentina has reneged on its debts and the third time this century.
The rating agency said it was downgrading the country’s credit rating to CCC, the lowest possible. A move quickly followed by Fitch.
Argentinian president Mauricio Macri finds himself running for another term under economic and financial conditions he promised to improve after the chaos of Kirchner’s presidency.
The markets and the people of Argentina are running out of patience.
Pedro Gonçalves is financial correspondent for International Investment.
CATERING TO THE UNIQUE NEEDS IN ISLAMIC WEALTH MANAGEMENT
A SIMPLE AND ATTRACTIVE TAX SYSTEM
REPOSITIONING LABUAN IBFC
FINTECHS URGED TO TAP LABUAN FOR FOREIGN FUNDING
Soaring inflation and a plummeting peso are causing Argentina’s wealthy to cast their eyes across the River Plate in search of a wealth manager to tango with. Pedro Gonçalves reports
“almost everyone involved has had a hand in Argentina’s ongoing economic and financial debacle, and all are victims themselves, having suffered reputational harm and, in some cases, financial losses”
Mohamed El-Erian, Allianz
Argentina’s economic crisis boosts Uruguay’s wealth management
“For generations, Uruguay served as an offshore haven for Argentines seeking to protect their saving from high taxes and periodic financial crisis back home,” Juan Jose Varela, head of Montevideo-based firm Gletir Corredor de Bolsa told Bloomberg.
“Many clients who were thinking about going to local institutions in Argentina have stayed with us,” he added.
The financial crisis in Buenos Aires could give a fatal blow to Argentina’s offshore advisory industry. Under Macri, the market regulator, Comisión Nacional de Valores (CNV) created AAGI licenses, which allowed local advisers to manage both onshore and offshore assets.
The previous framework made offshore advisory illegal and the new licenses were seen as a way to inspire wealth managers to look again at Argentina’s wealth space.
However, the bureaucracy involved in obtaining a license – to date only two firms have secured an AAGI – the strict compliance requirements and higher taxes advisers would have to pay in Argentine have pushed many firms and bankers to settle in Montevideo.
Geneva-based Mirabaud Group obtained authorisations from the Central Bank of Uruguay to open two wealth management subsidiaries. Both located in Montevideo, Mirabaud Advisory (Uruguay) SA offers Mirabaud's services to local clients, while Mirabaud International Advisory (Uruguay) SA provides services to clients from other Latin American countries.
Last year, RL360 continued its Latin America expansion with the addition of a new office in Montevideo, Uruguay. The move was seen as a show of confidence for the potential growth in the region.
Wealth manager BiscayneCapital opened a new office in Montevideo, UY, as part of its growth strategy. Also, ex-Heritage banker Federico Inciarte Sánchez and attorney Carlos Ruiz Lapuente launched advisory firm Radix Wealth Care in Montevideo.
DON’T CRY FOR ME ARGENTINA
As investors flee the country and banks such as Goldman Sachs and Barclays have revised down their bets on the economic outlook, the current administration was forced to seek to pacify the markets with a re-profiling of the nation’s debt, price freezes, minimum wage hikes and even capital and currency controls.
Argentina was also pushed into asking for help to the International Monetary Fund (IMF). It is the 22nd time in the last 60 years that Buenos Aires seeks help from the IMF, making Argentina a record holder.
In June 2018, it secured a $50bn loan, the largest loan ever granted by the IMF. With it came conditions, in the form of sweeping austerity measures.
Macri had to slash government spending and reduce subsidies for water, electricity and heating gas to meet deficit targets agreed with the IMF. Higher utility costs soon meant higher prices and lower consumer spending.
Something that did not sit well with the working population used to a previous free-spending populist government and is one of the reasons behind the government’s first defeat in the August elections.
Markets went into a tailspin amid fears that the October elections will result in a return to populism, which would violate the IMF deal and could spark yet another debt restructuring.
“As in Agatha Christie’s Murder on the Orient Express, almost everyone involved has had a hand in Argentina’s ongoing economic and financial debacle, and all are victims themselves, having suffered reputational harm and, in some cases, financial losses,” said Mohamed El-Erian, chief economic adviser at Allianz.
“Yet those costs pale in comparison to what the Argentine people will face if their government does not move quickly – in cooperation with private creditors and the IMF – to reverse the economic and financial deterioration,” he added.
BUENOS AIRES SLAMMED BY DOUBLE DOWNGRADE
Standard & Poor’s cut its rating on Argentina’s creditworthiness further into junk bond territory as it judged the country to have defaulted on its debts again, after Buenos Aires announced it was extending the maturity of several of its government bonds.
S&P said this amounted to a default, making it the ninth time Argentina has reneged on its debts and the third time this century.
The rating agency said it was downgrading the country’s credit rating to CCC, the lowest possible. A move quickly followed by Fitch.
Argentinian president Mauricio Macri finds himself running for another term under economic and financial conditions he promised to improve after the chaos of Kirchner’s presidency.
The markets and the people of Argentina are running out of patience.
Pedro Gonçalves is financial correspondent for International Investment.
