It is an exciting time in the Latin American wealth management market, as wealth creation spurs demand for previously little-required services such as family governance, Avi Nahum, a partner at Pioneer International Group, tells Family Wealth Report in an exclusive interview.

The firm was founded 25 years ago as a financial advisory company in Israel providing comprehensive financial planning to expatriates, and has since evolved and spread its reach to various countries.

The structure

Pioneer still has many of its business units in Israel (amongst them investment research and marketing, operations, and internal IT services) but changing times have seen several developments. It now has offices in South Africa – in Durban, Johannesburg and Cape Town – and South America. It does not serve US residents, but views Miami as an ideal place from which to operate a LatAm hub.

The company defines itself as a multi-family office – a term surrounding which there is much confusion. For its part, it offers asset management, tax planning, estate planning and family governance services to high net worth individuals.

Clients with at least $10 million in assets fall into Pioneer’s UHNW category, where the more sophisticated services such as family governance are more likely to apply. Nahum stresses however that the services a client receives are not dependant on a strict asset requirement.

In terms of client-to-advisor ratio, each relationship manager will look after up to 25 clients, although at the lower end of the wealth scale this goes up to around 40.

Pioneer is not, though, and has no design to be a private bank. “We are not in competition with [the banks]; they are our partners,” says Dafna Gonen, executive director for the group.

It cherishes its status as an independent wealth manager and offers fee-only advice based on an open architecture model.

Since the financial crisis, clients are much more interested in objectivity and transparency, says Nahum. This has typically been one of the strengths of multi-family offices – although the distinction has become blurred – as they did not offer proprietary products. “In the past you had to knock on doors to get people to listen, now friends of clients are coming to us because they’re interested in what we’re saying,” he tells FWR.

The Latin American opportunity

The Latin American market is one area where Pioneer sees plenty of opportunities. This is an opinion echoed throughout many parts of the wealth management industry, and a number of the private banks have been focusing their efforts on ramping up their business there.

The firm has client liaison officers servicing Mexico, Venezuela, Colombia, Argentina and Panama. It emphasizes the importance of having advisors speaking local languages, with Nahum himself fluent in English, Spanish and Hebrew.

The nature of the Latin American market means there is a strong need for tax planning and wealth protection services. “Wealth creation in the region, taking into consideration political instability over the years, means there is a need to protect assets, either within the country, or using legal offshore vehicles,” says Nahum, adding that cross-border multi-family office services are often required to meet this demand.

Family governance services – such as helping families meet philanthropic wishes, manage decisions within the family, and account for the specific needs of individual family members – are also a growing market in Latin America, says Nahum.

The firm’s clients in the region are mainly entrepreneurs, who have built up very successful businesses but need financial advice to manage the personal proceeds. There are also issues such as involving second and third generations in the family business, a new challenge for many families.

“This is the human aspect of managing money,” says Nahum. “We are seeing this growing fast.”

The multi-family office

Another trend Pioneer has seen, while it has been recruiting and building its business over the past couple of years, is the tendency for experienced wealth planners who have developed their careers at private banks to move into the multi-family office environment.

“Over the past couple of years people are joining us from private banks, such as the large Israeli or Swiss private banks, who have established long careers, but who want to work in a family office environment with more independence,” says Gonen.

“In private banking you only see one tranche of the client’s assets, as a client holds much more than their account with a specific bank. If [advisors] want to develop their HNW relationships they can move into a family office atmosphere. You see a bigger portion of the client’s wealth and can build long-term relationships with the client and his family for a much longer term,” she adds.