Expat Financial Advisor in Brazil

After speaking about expat financial advisors for people living in Saudi Arabia, this article will speak about Brazil.

What financial investments can expats make in Brazil – locally and internationally – and what are the benefits of portable, global and online investing?

For any questions, or if you are looking to invest as an expat, you can contact me using  this form, or via the WhatsApp function below.

Introduction

In this article, we will talk about financial advisors, their main role and importance in the financial spectrum as well as in the lives of investors, businessmen, entrepreneurs, and individuals in general, who aim to learn wise budget management skills. We will mainly focus on expat financial advisors in Brazil.

First off, let us have a general understanding on who exactly a financial advisor is and why do we need them when building a financial culture.

A financial advisor is a professional who has a sufficient knowledge and experience in personal financial planning, life insurance and investments. With the help of his competencies, a financial advisor helps clients to do a comprehensive assets management.

Financial advisors, can provide many different services, such as investment management, tax planning, and estate planning

With the help of a financial advisor, you will be able to solve a wide range of tasks such as:

  • Ensure financial security for the family, select life and health insurance contracts for both yourself and your family 
  • Draw up a personal financial plan with a detailed description of tasks and specific calculations in numbers 
  • Determine where and how to invest 
  • Have a detailed understanding with taxation and reduce the taxable base 
  • Solve the issues of inheritance of capital and business 

And of course, the list is continuable…

The situation in the world is gradually changing and more and more people are realizing about the benefits of the help of a financial advisor. The financial culture is gradually taking shape and soon we will see that turning to a financial advisor will be as common as turning to a lawyer.

The world’s largest investment company, Vangard, conducted a study on the interaction of an investor with a competent financial advisor. What did they find out?

On average, the additional profitability of an investor that a financial advisor brings to him is 3% per annum.

At the same time, the consulting investor receives the maximum profit during periods of maximum growth or maximum decline of the market, i.e. when fear or greed reigns in the market.

The value of a financial advisor is not in how and what securities he will select for your investment portfolio, but in how he will correct your behavior in the market, acting as a “psychological coach”, so to speak.

In this question, the Vangard researchers turned out to be meticulous guys and broke 3% of the additional income from a financial advisor into components:

  • 1.5% brings “behavioral coaching” – correction of the investor’s behavior depending on the market situation.
  • 0.75% “asset allocation” – the distribution of assets in the client’s portfolio.
  • 0.35% rebalancing – periodic redistribution of funds within the portfolio between various assets.
  • 0.4% the rest on trifles.

Considering compound interest, this 1.5% in the future adds up to an investor in huge amounts, not comparable to the cost of a financial advisor.

Now, when we have a general understanding of financial advisor’s role and responsibilities, let us move to their main types and highlight the unique features of each. In general, financial advisors 

But in this article, we will talk about three of them – bank financial advisors, local financial advisors, and online financial advisors.

  1. Bank financial advisors 

They could work as advisors to the bank they are employed through or to the individual and business customers of the bank.

Either way, a bank financial advisor works closely with her or his clients to determine the best way of managing their money and assets.

Financial advisors primarily give their clients guidance on investments and assist in long-term financial planning. Services for individual clients often include establishing retirement plans and college funds, recommending stock purchases, or managing portfolios.

However, the services required depend completely on the type of customer base an advisor cultivates. 

Mostly, expats refer to bank financial advisors for opening savings accounts.

As in any country, expats should work on beating inflation and taxes to preserve the value of their savings. In general, Brazil is a high-tax developing country and its financial system is tightly regulated.

Opening an account is something that expats should plan for several weeks in advance. Bank accounts may be opened by both residents and non-residents, but banks are generally quite reluctant to open a current account for a non-resident.

In Brazil, financial institutions charge a lot, thus investments should be made wisely. Generally, heavy charges equal long-term investments.

Expats should also be wary of the financial transactions tax (Imposto sobre operações financeiras – IOF). The rates may vary considerably from one year to another, as this tax is used by Brazilian policymakers to regulate its financial markets. 

Brazilian savings accounts (Poupança) interest rates have always been quite high. Currently, you could expect to get 6% on an easy-access savings account, tax-free.

This tax exemption, in substance, is just a way to ensure your savings are not going to erode because of inflation.

Overall, Brazilian savings accounts tend to have inflation-busting yields. Currently, you could expect to get 6% on an easy-access savings account, tax-free. 

Brazil’s main banks are Banco Itaú, Santander, Banco do Brazil, Caixa and Bradesco. All banks are regulated by the Central Bank of Brazil (Banco central do Brazil). Below let us list a couple of savings accounts respectively stating their main features.

  • Youth savings account – provided by Santander bank.

The key feature of this account is that it is a great way for those under 18 years old to establish good savings habits.

  • Account opening deposit is minimum $10
  • There is no minimum balance requirement
  • This account interest is bearing
  • There is no monthly fee ($0)
  • Age requirement – available to individuals under 18 years of age. (account requires a legal guardian co-owner)
  • ATM withdrawal fee – $3 for domestic non-Santander ATM withdrawals.
  • Savings account – provided by Santander bank

The key feature of this account is that it is a straightforward way to save.

  • Account opening deposit is minimum $25 
    There is No minimum balance requirement.
    This account is interest bearing.
  • Monthly Fee – $1. Monthly Fee waived with any personal Santander® checking account or with $100 average daily balance in the Santander® Savings account.
  • ATM withdrawal fee – $3 for domestic non-Santander ATM withdrawals.
  • Blue savings – provided by Caxia bank

Savings account type for you, your children or any individual.

With it, you can keep your savings in a specific account, with your own card. It can be handled at Caixa Branches, ATMs, Internet Banking and Mobile Banking. 

  • Bradesco savings account – provided by Bradesco bank

Savings is one of the most traditional, simple, and safe investments to invest your money in, as profitability will never be negative. With it, you accumulate reserves and better plan the realization of your dreams.

Here, you can easily have a savings account linked to the current account or you can open an independent savings account.

  • Exempt from Income Tax and IOF
  • No monthly maintenance fees
  • Monthly income, according to Law 12,703 of August 7, 2012
  • Protection of the Credit Guarantee Fund for amounts of up to R $ 250 thousand per CPF and per banking institution

Brazil’s economy has recently attracted more and more attention from international investors.

This is caused not only and not so much by purely economic reasons associated with the high profitability of investment in Brazil, but with the possibility of preserving the already existing investment capital and its small, but outstripping inflation, increase.

The minimum percentage of return on investments in the Brazilian economy must be higher than the interest on the Brazilian bank savings accounts, otherwise the investment itself becomes meaningless.

It should be said that all sectors of the Brazilian economy that are open to the average foreign investor are not very profitable.

The point is that anything that is profitable and highly profitable in Brazil is practically inaccessible to small and limited private foreign investment.

All highly profitable sectors of the Brazilian economy and enterprises are monopolized and run by closed groups, almost always with state participation. It is unlikely to get into this group. This is due to the history of the development of statehood and power in Brazil.

So, what areas of activity remain for foreign investors in Brazil? If we proceed from the official version for foreign investments, then they are attracted to Brazil to create new jobs for the local population.

Basically, these are unstable sectors of the economy with high risks and highly dependent on global financial fluctuations. For example, the tourism industry in Brazil.

Many hotels and other tourist infrastructure in Brazil are owned by foreigners. Most of the foreign investment in tourism is accounted for by Argentines.

These investments were made in anticipation of the traditionally large flow of tourists to Brazil from Argentina. Then there are French and British investors. Basically, they placed their investments in Brazilian hotels, restaurants, various clubs and small hotels.

There are also many and simply different real estate, which in the season is used for tourist purposes.

By the time of investment, most of the foreign investment in the Brazilian tourism sector fell on the period when the dollar was approaching three Brazilian reais.

After a significant strengthening of the Brazilian real over the past four years, the flow of foreign tourists to Brazil has decreased, or at least qualitatively changed, which led to a significant decrease in profits or even losses.

Therefore, many objects of the tourist infrastructure in Brazil are now for sale. But tourism is one of the most promising investment sectors in Brazil. Only this perspective, given the attitude to it from the clumsy Brazilian bureaucratic machine, seems rather distant.

It is also necessary to consider the risks associated with the provision of tourist or catering services to the population.

From an investment point of view, investing money in this business requires systematic control and a lot of personal involvement in this enterprise. If there is no possibility of personal participation, then, most likely, the investment will be lost, and, moreover, various litigations are possible.

If you invest in production in Brazil, then the possible risks here are much less, but the time to get the first profit will increase significantly.

This is due to the rather limited domestic consumption market, where a very large part of the population lives below the poverty level and buys only necessities. Of course, it is better if this production is exported. In this case, you can even have preferences from the Brazilian government.

  1. Local financial advisors 

They are very much needed when expats want to send money back to their homeland and of course – vice versa.

Today, sending money abroad can be done in a matter of minutes no matter where you are. With the development of digital banking and online apps for money transfers, you can make international money transfers and exchange multiple currencies without leaving your home.

But if you are not careful, you might end up paying more than you should for the convenience of a fast money transfer, they are not always necessary nor the best option for large or regular payments.

Fees charged for international transfers can be high. It is worth investigating various providers to make sure you get the best deal when sending money abroad.

This guide helps you choose the best ways to transfer money internationally, from traditional banks to one of the many innovative online tools available today.

Money transfers in Brazil are convenient, but also quite expensive. These are the busiest transfer corridors when sending money to Brazil:

Japan – Brazil, United States – Brazil, Portugal – Brazil, Spain – Brazil, Italy – Brazil. This information is very useful in terms of helping to identify how money moves in these corridors and which are the preferred ways of sending it to Brazil.

Below you will find several options for money transfers within, from and to Brazil along with their weak points which will help you understand why do we need to turn to a local financial advisor when planning a money transfer.

Money transfers within Brazil

Banking is quite expensive in Brazil. Despite the high interest rates there are also government-imposed taxes on every transaction. These include a portion of 0,038% and a commission fee of 2% of the amount you are transferring. When transferring money abroad further costs come in addition.

International money transfers

When transferring funds abroad from your Brazilian account you must be present at the bank branch to sign the foreign exchange contract that states the conversion rates for the transfer. The same procedure applies when receiving international transfers in Brazil.

To perform an international bank transfer, you have to provide the name of the receiving bank, the account number and the account holder, the SWIFT code and the IBAN number of the receiving bank. Such a transaction usually takes 5-7 workdays. 

Here are the cons of the statement above:

  • Most of the banks in Brazil allow for SWIFT transfers from remitters abroad. However, some of them may work through correspondent banks, making transfers costly and slow. The standard processing time for international wire transfers to Brazil from countries in Europe and North America is four business days.
  • It is also important to point out that time differences, working hours, banks verifications and approvals, and wire amounts can affect the transfer process. With that said, interbank transfers can be done either in person at a branch or through the online platform.
  • It is also important to point out that time differences, working hours, banks verifications and approvals, and wire amounts can affect the transfer process. With that said, interbank transfers can be done either in person at a branch or through the online platform.

Importing and exporting money

You are permitted to import and export any amount of money to and from Brazil but amounts over R$ 10,000 must be declared.

Now let us see what the most common ways of receiving money in Brazil are.

There are several ways of receiving money in Brazil including direct bank deposits and cash collections. The choice of the receiving channel largely depends on the proximity, convenience, and other personal preferences. The following are the ways through which you can access money sent to you from abroad.

Direct Bank Deposits

If the sender has deposited money into the recipient account either through the MTO platform or SWIFT transfer, the recipient may have to wait for up to five days to receive the money. When receiving large amounts of money, this method is the safest.

What is Required to Receive Money in Brazil?

When your money finally arrives in Brazil, you will get an SMS notification or an email depending on the details the sender filled in. As you prepare to go and collect your money, you’ll need to put together the following information.

  • Your government-issued identity document. A passport or national identity card can suffice
  • The transaction reference number sent to you by the person who transferred the money
  • The name of the sender and the amount you expect to receive

Providers such as MoneyGram may require that you fill out a form giving more details. Also, large amounts of money may attract scrutiny from the authorities.

The methods listed definitely were not the most clear and easy ones to understand, so in this cases, the most effective solution remains in the hands of a financial advisor, especially when an individual does not have a financial background and needs to make a wise budget management.

  1. Online financial advisors 

They are more accessible,and often cheaper, than advisers who work face-to-face.

Online advisory firms, such as our own, have much lower overheads.

It is 2020, the century of digital technologies. We watch the world slowly going to digitalization and the spectrum of financial advisors is not an exception.

There was a time that you needed to walk into a brick and mortar office and sit face to face with a financial advisor to get financial advice and help. But technology has changed that forever!

Now people provide online financial advisor services for an hourly or project financial plan rate. Through Go To Meetings, email, and phone consultations they help people all over the world define the things in life which take both money and planning to achieve, then design a financial plan to help them achieve everything within reach of their finances. 

The best online financial advisor will create a plan for you without the conflicts of brokerage commissions, perks, or other benefits. We strive to be that advisor by having only one agenda: to help you achieve the things in life that require both money and planning!

How is the relationship between the client and the financial advisor built? During a conversation, the online financial adviser studies the client’s preferences, estimates the amount of time he can devote to investments, his financial awareness, and the life situation in general.

The consultant finds out whether the person has credit obligations, what part of the income they make up. And finally, the main task of this communication is to identify the goals that need to be achieved, and then to offer individual financial solutions.

More and more people start from goal setting in their decision to invest. As financial literacy grows, expectations become more specific and attainable. But there are also quite a few citizens who come for a “high rate”. The financial advisor explains that, for example, the stock market implies essentially unlimited returns, but the risks there are comparable.

With a financial advisor, people invest consciously, objectively understanding and accepting all the opportunities and risks of a personal strategy. Therefore, the financial advisor is necessarily interested in whether the person is ready to regularly save money to achieve the goal, what financial instruments he uses or used before, what is his attitude to financial risks and so on.

To conclude, financial advisors play a key role in financial planning of an individual, regardless of his or her position in life. It’s quiet important to be a great risk analyzer and a wise budget manager in order to make an efficient financial planning, but in some cases, it is not enough as

the solution to a financial problem does not always lie on the surface. 

Often, a financial advisor, simply by virtue of experience and specialization, sees the situation from the opposite side and finds a simpler solution, no matter if it is about savings for old age, buying an apartment or educating children. 

If you are ready to take a balanced approach to the formation of a reserve fund, systematically implement financial planning, analyze expenses and anticipate financial prospects, then consulting a financial advisor in areas of “financial turbulence” or financial stagnation can become the same natural procedure as repairing a car or going to a dentist.

So, when planning your finances and clashing with a bit of doubt, do not hesitate to contact a financial advisor, as he will guide you through the whole process, suggest the optimal solutions and you will only need to sit back, learn, and enjoy the fascinating outcome.

Most importantly of all, an online and global advisory firm is portable.

In human terms, this means that you don’t need to change anything when you move from country to county, or at least don’t have that many hassles.

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