For a long time, Brazilian wealth managers had a formidable competitor in the form of domestic government bonds, sometimes paying interest rates of 14%. Even in that environment, family offices such as Consenso were able to prosper; the firm has accumulated more than $10bn of assets under management since it was founded in 2003.
But with domestic interest rates in Brazil having dropped sharply, managers really have an even bigger chance to add value, says Luiz Alberto Hess Borges, former managing partner at Consenso and current Head of UBS WM Brazil, which won best family office services in Brazil in this year’s Euromoney private banking survey.
“Lower interest rates have of course been good for us,” says Borges. “Now Brazilians really need financial advisory to aggregate value.”
It was in this context that UBS, the largest wealth manager in the world, sought to accelerate its expansion in Brazil. In 2017, the Swiss firm opted to acquire a majority stake of the biggest independent multifamily office in Brazil.
“The association with UBS enhances and consolidates the Brazilian operation, enabling privileged access to the world’s leading wealth manager and its’ Chief Investment Office with a team of more than 200 analysts in 13 key financial hubs”, said Sylvia B Coutinho, Head of WM LatAm & Country Head UBS Group Brazil.
Accordingly, while the Swiss bank’s acquisition brought important structural benefits to Consenso, it was certainly not going to change the firm’s way of going about its business, according to Borges.
Consenso translates into “consensus” and reflects the focus on understanding the client and the family dynamics and expectations including the next generations. Therefore the financial advisory reaches another level of efficiency and objectivity.
UBS Consenso works with an open architecture platform, being able to choose what’s best for its clients and to provide independent advisory, focused on each family´s needs. Using a 360º comprehensive view, UBS Consenso is the single point of contact for the clients, intermediating and coordinating all aspects related to the clients’ wealth.
This client centricity goes back to before the firm’s beginnings, when the managing partners were executives at Banco BBA Creditanstalt. In 1997, according to Borges, the executives established that the same officers would work on both domestic and off-shore opportunities. Borges says this was “revolutionary” at the time.
Adding to that, Borges said, “When we started 100% of our clients were entrepreneurs, so we were not only contemplating the dynamics of financial markets. This is perhaps our most important strength. When you bring the real economy to your analysis, your perspective becomes far richer.”
“Being more interested in wealth preservation than in profitability has also meant a natural migration of clients to businesses like ours during the downturns in the Brazilian economy,” says Borges. “A trend that is still lasting in today’s context.”
Caring where markets can’t
UBS Consenso advises its clients on products ranging from ordinary financial securities to more complex investments such as private equity and real estate. Yet Borges believes that the job of a good wealth manager goes way beyond any particular take on markets. As he points out, high net worth individuals can find hedges for almost any product in financial markets.
“However, there is no hedge for family events, and these events can jeopardize a net worth far more than market events,” he says.
One example of putting this theory into practice is the business’s focus on succession planning. UBS Consenso’s Advisors sometimes attend board meetings at family businesses, and they often advise the client to make a small donation to their children, thus encouraging them to make their own financial decisions.
“This exposes the children to decisions they’ve never had to take before, and often they’re actually more conservative than their parents,” says Borges.
For Borges, it feels that the key to success is not markets but offering a personalized service. Yet this can still materialize into astute practical financial advice.
Around 30% of UBS Consenso’s assets under management are invested in off-shore markets, and the firm’s business is not betting on currency movements. But a personalized take on currency exposure might mean, for example, the firm understanding that hard currency risk for a client with a domestic business is not the same as hard currency risk for a client whose family business is itself a generator of dollars.
In uncertain times in Brazil, therefore, UBS Consenso believes in an approach tailored to the personal needs of an investor.