Miami Firm Gains as Wall Street Banks Drop Latin America Clients

As more US banks cut back wealth-management services for clients in Latin America, a Miami-based firm has been reaping the benefits.

(Bloomberg) — As more US banks cut back wealth-management services for clients in Latin America, a Miami-based firm has been reaping the benefits.

Insigneo, which provides a platform with different services for independent investment advisers, has tripled its staff and increased assets under management in its ecosystem to more than $20 billion from less than $3 billion just six years ago.

The number of independent investment professionals using the platform has grown to nearly 500 in that period and Insigneo’s executives are on the hunt for potential acquisitions to keep increasing their share of the industry. 

“We somehow found a lane that was left open to us which is quite unusual in an industry that has been so well established,” Raul Henriquez, 62, the founder and chief executive officer, said in an interview at the firm’s headquarters in Brickell. “It’s been kind of an accidental phenomenon that has allowed a very small player like us to start becoming more relevant.”

In recent years, banks including Wells Fargo & Co. and Morgan Stanley have either exited or restricted wealth-management services to some clients in Latin America. 

In other cases, minimum amounts to work with customers have increased. Regulatory changes and “know your customer” requirements have led firms to stop servicing some clients since the impact on the business is relatively small, Henriquez said.

That’s where Insigneo steps in. The firm allows wealth managers to keep their book of clients and receive services ranging from tax support to compliance to technology and portfolio models, said Javier Rivero, 45, the chief operating officer. 

“Everything that the adviser had at the larger firm, we’ve replicated, but we’ve replicated in a simpler way and in a way where they can benefit from the economies of scale,” Rivero said. “It’s the recipe to be able to serve that client because they’re not just clients from Brazil, Argentina. They’re global.”

Last year, Insigneo acquired a broker-dealer in Puerto Rico and an investment-advisory business in Uruguay from Citigroup Inc. Additionally, Bain Capital Credit and JC Flowers invested $100 million in Insigneo in 2022 and took a minority stake. 

Political Uncertainty

Henriquez, a native of El Salvador who co-founded the firm under the name Hencorp in 1985, remains the majority shareholder. Insigneo declined to provide annual revenue figures.

In 2021 Wells Fargo closed its international wealth-management business, while Morgan Stanley has recently begun reviewing certain accounts in the region.

Starting Jan. 1, the required account minimum for Morgan Stanley clients from Panama and Bolivia will increase to $10 million from $2 million, according to a person familiar with the matter. The minimum for those in markets including Brazil, Chile and Mexico will fall by half to $1 million, but the bank will no longer open new accounts for people in Venezuela and Nicaragua, the person said.

A Morgan Stanley spokesperson confirmed the changes, saying the bank remains “committed” to its international wealth business, but has developed targeted client models “that reflects appropriate risk considerations.”

Leftward Swing

Political uncertainty in Latin America is also helping drive more business to Insigneo. A swing to the left among governments in recent years prompted more capital to flow into the US and dollar assets from places like Chile, Colombia and Peru, Rivero said.

Even in Brazil, where Insigneo faces stiff competition from large local players, independent wealth advisers are using its platform in bigger numbers, the executives said.

Insigneo is on the lookout for more potential acquisition deals and sees private markets and the possibility of attending to ultra-high-net-worth clients through advisers as big opportunities. The firm opened another office in the Coral Gables neighborhood of Miami this month. 

“We’re seeing a clear trend toward the democratization of private assets,” Henriquez said. “Conversely, we’re getting to a point where serving the needs of family offices or the ultra-high-net-worth segment is something that strategically starts to make sense as another channel for growth.”

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