More On Legal & Compliancefrom The Advisor's Professional Library
- Regulatory Oversight of Investment Advisors Although the regulatory environment is in a state of flux, it is imperative that RIAs adhere to their compliance obligations. To ensure compliance, RIAs and IARs must fully understand what those obligations are.
- Suitability and Fiduciary Duty Recommending suitable investments is more than just a regulatory obligation. Many investors bring cases claiming lack of suitability, so RIAs must continuously put the onus on clients to notify the advisor of changes in their financial situation.
Brokerage firms are ever encouraging their advisors to find a niche market, and advisors duly report they work in a niche — such as clients who are at or near retirement — that are not so niche.
Far more rare is an advisor like Domitilia dos Santos, in Morgan Stanley’s Park Avenue office in New York, whose language and culture-based niche makes her a unique community resource.
In other words, prospects are highly motivated to find her and clients highly reluctant to leave her because they feel the Portuguese-speaking advisor, and no one else, can provide access to all that Wall Street has to offer them.
Twenty-nine years ago today, Dos Santos picked up the phone the day after Labor Day to start cold calling and began building what is today a substantial clientele, a majority of whom (more than 60%, she estimates) stem from the broader population in New York City.
But, also from the beginning, she found that prospects of Portuguese extraction just found their way to her. In 1984, a Portuguese consular official in Liberia who wanted an account cold-called her; he referred dos Santos to someone in New York, who in turn referred her to someone else, who remains a client to this day.
In 1985, dos Santos inherited a Portuguese client from a departing broker. “I didn’t know anything about this guy,” she told ThinkAdvisor in an interview. “He’s still a client, and a very good one.”
These days, however, dos Santos actively cultivates the niche, such that nearly 40% of her practice are Portuguese speakers, mainly Portuguese nationals working in Brazil.
Dos Santos’ family emmigrated to the U.S. from Portugal when she was 13 years old. And Portuguese continue to emigrate — a pattern that has only intensified with the financial crisis plaguing Europe’s Mediterranean periphery — often bringing their PhDs with them to work for companies such as Alcoa or General Electric in Brazil’s commercial capital of São Paulo.
(Many Portuguese also seek opportunity in former African colonies of Angola and Mozambique, but Patriot Act rules and economic sanctions prohibit dos Santos from opening accounts for nationals of those countries, the Morgan Stanley advisor says.)
The road this New Yorker takes to this affluent professional class of Brazilians runs through Lisbon’s Catholic University, of all places. Dos Santos goes to Portugal every year, and while there spends two of her days (totaling nine hours) teaching a class pro bono for the college’s master’s in finance program.
The course covers the basics of investing and wealth management. That teaching effort, together with U.S.-based financial literacy education and more recently LinkedIn events in the broader Luso-American community, sparks a significant “word of mouth” factor.
“I hear from people overseas who would like me to do their financial plan,” she says, describing the concept of planning as a complete novelty to foreigners.
“Nobody thinks there is such a thing as a financial plan: ‘What you mean you plan for your kids’ education? What do you mean you plan for retirement?’ They’ve never heard of it,” she says.
“It’s all word of mouth. With anything having to do with finance, Portuguese look at me as a bridge between Wall Street and Brazil,” she says.
The response is not always positive, though. “I get bizarre requests,” she says, citing an example of a Brazilian lawyer who was convinced a piece of paper he had was worth $2 milllion.
“It was worthless,” she says. “He thought it was corporate bond; it was [merely] a copy that had an old [i.e., outdated] Citibank logo on it.” A complete waste of time, she says.
Another cold contact tried to engage dos Santos in fraud. “People try to use your good name,” she says, noting that she is quick to delete e-mails from strangers.
Hassles aside, dos Santos says her niche clientele need extra help, which she is able to provide.
She cited the example of a Brazilian client whose son was traveling abroad and passing through Las Vegas. His Brazilian credit card won’t work in the U.S., so dos Santos will call the bank to enable its use.
Similarly, she is at the ready to help a client whose son is attending university in England and needs to pay tuition in British pounds. The rest of the world, while prepared to deal with dollars, may not be so ready to help with lower profile currencies like the Brazilian real. And this client, an orthopedic surgeon, doesn’t want the hassle, so he calls dos Santos, who responds by sending a letter to the bank to effect a wire transfer.
“Clients overseas are much more loyal,” dos Santos comments. “They’re not as apt to move from one brokerage firm to another. They’re not going to call another broker and open account. They can’t do it because of the language [barrier].”
While that may make foreign clients easier, there are attendant difficulties that balance the equation, dos Santos says, noting “zillions” of paperwork requirements: not just the usual client agreements, but W-8 tax documents certifying — every three years — that a client is a resident of Brazil, copies of passports and the like.
As for face-to-face meetings, that’s usually quite easy. “Brazilians love to have apartments in New York. They love to come for a Broadway show,” she says, adding that Miami, a six-hour flight from São Paolo, is a popular second residence for affluent Brazilians.
While her niche is in serving the Portuguese diaspora, rather than expat advising per se, dos Santos has noted that there’s more discussion these days among her general clientele about retiring overseas.
“Some clients are saying: I’ll move to Ecuador, I’ll move to Costa Rica. It’s just talk right now,” but it’s on the radar, she notes.
Check out Want to Retire on Less Than $1,200 a Month? Try Living Abroad on ThinkAdvisor.