From a wealth management perspective, there are a number of reasons why South Florida is “a region of great opportunity,” says Luke Palacio of Citi Private Bank.

From a wealth management perspective, there are a number of reasons why South Florida is “a region of great opportunity,” says Luke Palacio of Citi Private Bank. Namely, the demographic reflects wealth migration from other parts of the US, as well as there being an international component which very much includes Latin America.

Palacio joined Citi Private Bank in March 2013 as Southeast regional market manager, tasked with reinforcing the firm’s presence throughout Florida in what Citi describes as the “key locations” of Miami, Boca Raton and Palm Beach – as well as other parts of the state. Given his extensive background in Latin America, Palacio also instigated a strategic focus on ultra high net worth Latin American clients that are based in North America.

The evolution of Miami is one that requires more global needs, Palacio told this publication. “Our presence in Latin America in particular…plays very well with the growth of Miami.”

A big factor linking Florida - which has for a while been regarded as a wealth management “hotspot” - to Latin America is the fact that 23 per cent of the Sunshine state’s 19.3 million inhabitants are of Hispanic or Latino origin, compared to a US average of 16.9 per cent (source: 2012 US Census data). The US also exports 2.6 times as much to Latin America as it does to China, with the continent being Florida’s largest trading partner.

“We’re trying to integrate more private banking services from the domestic side as well as from other aspects of the international private bank – across Europe and Asia – and link them into that [LatAm] market more easily,” Palacio said. A significant strand of this involves having members of the US-based private bank integrate with the teams that cover LatAm families.

Palacio said Citi isn’t limiting this “integrated coverage model” of working with families who have cross-border or multi-jurisdictional-type profiles to LatAm, although the continent is the more predominant demographic.

“Focusing on Florida is an opportunity to integrate more our international capabilities with our domestic private banking capabilities to fit the profile of a lot of these families that are becoming more multi-jurisdictional,” he said.

Indeed, globalization is, as the saying goes, making the world a much smaller place, with families becoming increasingly international - particularly wealthy ones.

Hotspot

In a wealth management report on Latin America in 2012, the global executive search firm Heidrick & Struggles noted that even as local markets stabilize, many wealthy individuals in the continent prefer to bank their cash in the “relative safety” of the US or Switzerland, helping to drive up private banking deposits in areas such as Florida.

Indeed, Palacio said Miami has become the predominant base for Latin Americans in the US, although there is also a growing European influence as well. The increasing number of Latin Americans establishing US residency is driven, among other factors, by high net worth individuals diversifying their portfolio globally and feeling that the US - and in particular Miami - is the best base from which to do that.

Charles Garcia, chair of the Florida group at Tiger 21, the peer-to-peer network for high net worth investors, previously said that the economy in Florida appears to be getting stronger, due in part to the real estate market having improved considerably in recent time.

“While in 2008/9 there were 68,000 empty apartments, all of that inventory has now gone and people are progressively building again. Some of that is because there are a lot of very wealthy Latin Americans – from countries like Brazil, Peru, Columbia, Venezuela – that have invested heavily into real estate in Miami,” Garcia said.

Likewise, Palacio highlighted that the evolution of Miami as a “LatAm hub” has transpired over the last 50 years and has continued to evolve.

“Now you have a very diverse culture that is very LatAm-heavy so it allows people to be very comfortable there from the perspective of cultural affinity and language,” Palacio said.

He described Miami specifically as a “gateway” into the US, and indeed other parts of the world, which presents to families from Latin America good value from a real estate and investments perspective. It has become more cosmopolitan with improved infrastructure - such as through airport investments – and more local services and professionals (more companies have relocated there, for example).

According to the World Wealth Report 2013 – compiled by RBC Wealth Management and Capgemini – Latin America, having logged the highest high net worth individual growth rate in 2011, decelerated in this respect in 2012 due to a slowdown in GDP growth and contraction in the Brazilian and Argentinean equity markets. Mexico was, however, a “bright spot,” with consistent GDP growth and strong equity market performance, causing its HNW population to grow by 6.6 per cent during the year. Looking at the broader trend of LatAm being increasingly seen as a wealth management hotspot, the region is perceived as an important market by many industry players who have intensified their focus on serving clients domiciled in Latin America and LatAm expats in the US and Europe, for example.