Brazil represents 42% of Latin America’s wealth management market in terms of assets under management, both onshore and offshore, according to consultancy McKinsey. The economic growth experienced in the past five years, together with the deepening of capital markets, made the country the largest and fastest growing onshore wealth management market in the region – with 577.2bn reais ($257.7bn) of assets managed locally as of the end of 2013.
All client segments expanded significantly. Local banks ramped up their presence and, as long as interest rates kept a few hundred basis points above inflation, the onshore market seemed stronger than ever. Then 2013 hit, and the gross domestic product grew by just 2.3%. The year started with historically low interest rates of 7.25%, first reached in October 2012, over inflation of 6% – the first time in years that real returns on bonds were close to zero, and the stock exchange stalled. The iBovespa index dropped by 15% in the year.