Miami and the South American connection: thoughts on the region
As Miami is a well known hub for South American uhnw money and is a hub for Latin wealth management, Citywealth thought it would be interesting to get views on Latin America from a leading legal advisor.
“Some say that Miami is the capital of South America – predominantly because we have more banks than New York and many Latin Americans have deposits in Miami, second homes (condos) or come up for shopping. Mexicans used to favour Houston, Dallas and San Diego and Brazilians, Argentineans and Chileans used to go to New York but Miami has had a long term influx of middle class Cubans who have contributed to Miami cornering the Latino market. Miami has more in common with Caracas than Cleveland now.
Mexico is tremendously wealthy
Of the hot spots in Latin America, the highlights include Panama, Mexico and Brazil. “Mexico is tremendously wealthy. There are two hundred million people in Brazil and a hundred million in Mexico and the wealth in the region comes from minimal taxes, manufacturing, celebrities and entertainment. You can earn phenomenal wealth in Latin America just by getting the sole rights to distribute a product from North America into a Central or South American country.”
Kidnapping is a reality
Of South American clients: “the only problem is clients live in a goldfish bowl with everyone knowing everyone: kidnapping is a reality. One of my clients was kidnapped, a maid was involved and a ransom had to be paid. There is a real reason for clients to keep a low profile and not to divulge assets. A lot of Latin money moves to the US and Switzerland because clients like the service and confidentiality.”
Of global high net worth trends “India is very big, I have a developer client opening a big shopping mall over there.”
Venezuela
“Venezuela is awash with oil wealth but their president, Hugo Chavez is a big thorn in the US’s side. There is constant immigration from Venezuela because of Chavez. In one district in Florida there is a spot called Weston which has been renamed Weston-uela because so many Venezuelans have moved there.”
“Hugo Chavez is a known admirer of Fidel Castro and has struck a deal with Cuba to supply oil at preferential rates which would understandably upset the Americans. Venezuela has the worlds fifth biggest oil industry, is a leading member of OPEC and is the third largest provider of oil to the USA. It’s a big industrial country.”
Colombia
“Colombians are moving back now, it’s safer since they changed the constitution to allow re-election of President Alvaro Uribe. Foreign investment is also moving back into Colombia but FARC (Colombia’s oldest and largest guerrilla group) still control parts of the country particularly jungle areas.”
FARC claim to represent the rural poor against Colombia’s wealthy classes and oppose the USA in Colombia. They fund themselves principally through extortion, kidnapping and the drug trade. FARC has 12,000 members with 30% being children under 18. “Despite FARC’s presence, its definitely not as bad as it used to be.”
Mexico
“Mexico is the biggest City in the world with oil and industrial wealth there. Historically Mexico published a blacklist which penalised residences for any offshore structuring. Richard Hay at Stikeman Elliott helped modernise their outlook and brought in a new low taxation structure for Mexican residents who hold money offshore.
Mexico came under presssure because it was criticised by well run offshore jurisdictions who objected to being tarnished with the term blacklist. The Mexican government were also undermined because residents worked their way around their rules as laws in other countries adapted. I ask how good the Mexicans are at collecting tax: “they are getting better.”
Brazil
“Brazil has just re-elected President Lula (Luiz Incio Lula da Silva) but most clients are opposed to him because he’s considered too far left. In my view Brazil has infinite capability but may never
realise its potential. The political stance they have makes it less interesting. On the reverse, the election of Felipe Calderon (right of centre) in Mexico is really good news”,
No-one wants money held in politically unstable places
Many of us learned lessons from Cuba in the sixties. No-one wants money held in politically unstable places. This is what differentiates South American clients from Europeans. I ask whether he see’s much money head for foreign shores, “Most of it would be in the US buying mutual funds or foreign stocks.” And philanthropy? “its not at the forefront of clients minds in the region. It is not to say that they aren’t philanthropic, it just doesn’t seem to be a big issue for South Americans.”
A good private client attorney is like a doctor
So what makes a good private client attorney? “Its about being treated as part of the family. I like to be a Doctor who treats the patient rather than the disease. I think empathy, technical skills and having understanding of where a client is coming from are important or it won’t work.”
