Asset & Wealth Management Revolution

Latin America's flourishing opportunities

LATAM 2025

The world's Asset & Wealth Management (AWM) industry has turned its eyes to the Latin American (LatAm) region, with many fund managers looking for growth in the burgeoning market.

The fabric underlying the industry is set to be upended in the coming years as new clients enter the space and the existing, bank dominated, distribution model begins to face challenges as clients look for new, and cheaper, ways of buying products.

 

 

Growth in the LatAm AWM industry has been strong in recent years, with assets growing at a 13% CAGR post Global financial crisis. Despite global economic uncertainties, as well as rising political and trade tensions, we believe that short-term effects will be shrugged off post 2020 and assets (in US dollars) will rise by 2025. In fact, we predict a 12.3% CAGR between 2020 and 2025, with assets reaching above the US$5 trillion mark.

Figure 1: Evolution of AuM (in US$ billion)

Source: PwC Global AWM Research Centre, National Regulators, Lipper, IMF, FSB, ANBIMA
*Note: percentage values within red squares respond to the CAGR for each respective period when fixing the constant US$ exchange rate at 2007.

Institutional investors, namely pension funds and insurance companies, will be the main drivers of asset growth - especially as the rising middle class begins to save for retirement. Additionally, as the younger generation comes into a massive wealth transfer globally, we expect to see ETFs becoming more popular and commonplace.

Figure 2: LatAm Client Assets (in US$ billion)

Source: PwC Global AWM Research Centre analysis. Past data based on Lipper, Brazilian Financial and Capital Markets Association (ANBIMA), Cámara Argentina de Fondos Comunes de Inversión (CAFCI), Mexican Venture Capital and Private Equity Association (AMEXCAP), Asociación Colombiana de Fondos de Capital Privado (ColCapital), Asociación Chilena Administradoras de Fondos de Inversión (ACAFI), IMF, ICI, Asociación Internacional de Organismos de Supervisión de Fondos de Pensiones (AIOS), Superintendencia de Banca de Perú (SBS), Financial Stability Board (FSB).

Four trends shaping the change in the LatAm AWM industry

In this report we expand on the four trends we identified in our Asset & Wealth Management Revolution: Embracing Exponential Change report, with a specific focus on Latin America. By 2025, we believe that these trends will be the drivers of change in the LatAm AWM industry.

Mounting regulatory and investor pressure are driving up costs across the global AWM industry. Fund managers must be proactive in light of the current situation, meeting client demands with new technologies and looking for opportunities to harness emerging trends. At the same time, regulators across the region should look for ways to work together, bolstering existing relationships to create a fund passport bloc that can compete on the global stage.

 

Technology remains a key component of the AWM industry. Managers across the globe have begun to invest in newer technologies and upskill their staff in order to meet new demands. Across LatAm, governments are positioning themselves for this realisation, and have passed new regulations that encourage the use of new technology, such as robo-advisors. With a relatively younger population and lower annual income, robo-advisors in the region could see a stronger than expected growth.

 

LatAm faces significant funding pressure and constraints in the coming years, especially as public debt continues to rise and populations begin to age. As banks around the globe retreat from financing, asset managers should look to play a larger role in this space. Additionally, with the strong growth expected in the pension systems of the region, asset managers will play a larger role in helping save for retirement.

 

Asset managers across LatAm must adopt new strategies, especially regarding alternatives and ESG, if they are to succeed in the increasingly competitive market. As demand increases, institutional investors will critically analyse alpha and beta - those managers who are able to provide alpha will flourish, but those who cannot will struggle in the coming years. The ongoing revolution is set to see major changes to fees, regulations, products, distribution, technology and talent in the coming years. In line with this, we believe asset managers are well-placed to seize the opportunities that the revolution will provide, as long as they take note of the new challenges that will emerge in the shifting environment.

 

Contact us

Olwyn Alexander
Global Asset & Wealth Management Leader
Partner, PwC Ireland
olwyn.m.alexander@pwc.com
+353 0 1 792 8719

Moisés Pérez Peñaloza
Pensions & Wealth Management Leader
Partner, PwC Mexico
moises.perez@pwc.com
+52 55 5263 6659

Caio Arantes
Asset & Wealth Management Leader
Partner, PwC Brazil
caio.arantes@pwc.com
+55 11 3674 2570

Gustavo Villafana
Asset & Wealth Management Leader
Partner, PwC Peru
gustavo.villafana@pwc.com
+51 1 211 6500

Tarik Ramirez Fuentes
Head of International Distribution,
SURA Investment Management
tarik.ramirez@suramexico.com

Dariush Yazdani
Global Asset & Wealth Management Research
Centre Leader, Partner, PwC Luxembourg
dariush.yazdani@pwc.com
+352 49 49 48 2191

Fanny Sergent
Asset & Wealth Management Assurance
Partner, PwC Luxembourg
fanny.sergent@pwc.com
+352 49 49 48 2478

Francisco Selame
Asset & Wealth Management Leader
Partner, PwC Chile
francisco.selame@pwc.com
+56 2 2940 0000

Gonzalo Falcone
Head of Global Distribution
SURA Investment Management
gonzalo.falcone@sura.cl

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