For more than a decade, Brazil rode high on soaring commodity prices – especially for oil – and a global perception that it had entered an era of sustained rapid growth and economic development. Now, with oil prices low and expected to remain so, many expats have left, uncertainty is in the air, and times have changed.
And so, out of necessity, Global Index International, which in recent years has become one of the country’s main expat-focused wealth advisory firms, has also changed.
Below, founder John Fleming tells Helen Burggraf about how he’s “decentralised” the business to accommodate the realities of the evolving international wealth management scene…
It was 25 years ago in November that John Fleming left England to travel around South America for a while with a friend. The then-23-year-old great-nephew of Penicillin-discoverer Sir Alexander Fleming did not, he says, have the slightest intention of setting up an international financial advisory firm there. Let alone getting married there, having children, and staying on for a quarter of a century.
It was just going to be “a year, maybe three” of adventure and travel, following a brief stint in the City of London with a US commodity company. The year was 1991.
So it is with mixed feelings now, Fleming says, that he is now spending less time in Rio de Janeiro, his home base for the past 12 years, and the city where he founded Global Index International in 2004.
“We actually started this decentralising process some years ago,” Fleming says. He has less than an hour to talk, in between meetings during a recent trip to London, where he is to be found more often now, as he looks after clients who live, he says, in more than 60 different countries.
But he is keen to explain all the changes that have taken place over the past 12 months.
It all began a few years back, he says, “when we set up our own off-site server for the business, for security reasons, as many businesses do now”.
“As a company doing business in Brazil, we have always had to be very very security conscious, because Brazil is not like the UK. Personal safety there is an issue; and the Royal Mail just doesn’t exist there – as I’ve had to explain over and over to life companies and banks in the places like the UK, when, for example, I’ve tried to get them to stop sending statements by post.
“Stage Two came when we created our own software system, called Globex, when we found we weren’t getting what we wanted from the investment companies and life companies in terms of professional-standard reports for our clients.
GLOBAL INDEX FACT BOX
Founded: 2004, Rio de Janeiro, Brazil
“For clients like ours, black and white statements on paper just don’t cut it.
“The way I see it is that everybody’s been talking about it [decentralising their global businesses] for 15 years, but now it’s becoming more and more acceptable to have as your base in a jurisdiction a person, rather than a fully-staffed office. And so that’s the way we’re going now.
“We still have an operation in Rio, and I still go back there often. I still have the same home there. But is Rio still the global headquarters of Global Index International? No. In its place, we have half a dozen legally-established operations, of which the Rio operation is one.”
Dubai, ‘Africa’s banking centre’
Perhaps the biggest change at Global Index has been the establishment of an official presence in Dubai, and the closure of a couple of offices in Latin America. Fleming says that’s because many of his existing clients have left Brazil and South America, while at the same time, his business in Africa has grown – and Africans, he says, do their banking in Dubai.
Another important change has been the opening, at the end of 2015, of an office in Lisbon, the capital of Portugal, which country has historic links (and shares a language) with Brazil. This office is being headed up by Fleming’s long-time strategist and global client adviser, Madhava Priya Marim, a multi-lingual Brazilian whom he describes as “devastatingly good” at what she does. (See next page, below).
Also new is an outpost on the Isle of Man, staffed by Ray Thornton, who looked after expat-focused advisers for more than 18 years on behalf of Friends Provident International.
“Strangely enough, even though Ray is new to Global Index, he’s already like one of the team, because he was our account manager [at FPI] for the past eight or nine years,” says Fleming.
“To do what we’re doing now, with a decentralised office, your team is everything. And Ray and Madhava, along with some others, like Juliana back in Rio, are a damn good team.”
In total, that means a staff of 14, not including himself, of which “four or five” are qualified to advise clients and actively do so.
“These days I split my time between Brazil, London, Dubai and Angola,” says Fleming. “Technically I’m based now in Dubai, but I travel a lot.”
Brazil’s difficult times
Fleming says Brazil’s current state of financial difficulty was predictable years before it began, and he personally doesn’t foresee a significant recovery in the near future, though he believes some of the doom-mongering by its critics has been over-done.
Still, the slide has been particularly unpleasant to watch. Brazil’s economy is in its third consecutive year of negative growth; unemployment, poverty and crime are edging upwards; a few months ago, the prime minister was impeached and replaced. Corruption scandals have netted top politicians and business leaders, and in 2016 the country was the poster child for a new and terrifying, mosquito-borne, birth-defect-causing illness known as the Zika virus.
Even its weeks as the host nation of the Olympics this past summer were notable for a dearth of foreign visitors and some problems having to do with the facilities, although some observers have said they feared it might have been worse.
Fleming says he has no intention of walking away from Brazil, but admits that it is going through a difficult time.
In addition to the problems with the oil industry, the digital revolution, he thinks, has largely “passed Brazil by”, and its various recent governments singularly failed during the boom commodity years to invest in infrastructure.
Still, the downturn has meant some improvements for expatriates: Rio is currently ranked the 158th most expensive place to live for expats by Mercer, the consultancy, making it significantly cheaper than five years ago, when it was twelfth most expensive.
At the same time, there is some hope that a tax amnesty programme, which the Brazilian government said in November had enabled it to collect the equivalent of US$15.8bn in taxes and fines, after the equivalent of around US$50bn in undeclared offshore assets was reported, could mark the beginning of a new era of on-shoring of Brazilian wealth, particularly over the next two years as countries around the world begin to exchange bank details under the OECD’s new Common Reporting Standard.
Perhaps the last word on Global Index International should go to a British expatriate who has known the business, and John Fleming, for years. This expat, who requested anonymity, noted that South America “can be a rough place, and harder yet for a gringo (Spanish slang for non-Hispanic person)”.
Yet despite this, “John Fleming has kept Global Index going, most of all by staying light: fast to move with the trends, while ever-cautious against the threats.”
MADHAVA MARIM: LISBON ‘A CROSSROADS’
FOR GLOBAL INDEX CLIENTS
One of the reasons Global Index International clients get along as well as they do with Madhava Priya Marim, company founder John Fleming thinks, is probably because like them, her life has taken place across international borders, ever since her dad, a Brazilian businessman, took her with him to India at the age of 8, in 1987, when that country was still relatively closed off from the outside world.
Then too, being the eldest of nine children – six of whom were boys – may also have helped her negotiating skills, she admits.
“You have to be tough, and you have to be able to get along with all of the different ages, the eldest, the middle ones, the youngest,” she says.
Being dropped into a Gainesville, Florida high school as a teenager for a few years in the 1990s probably also boosted her survival skills, as well as honing her English.
Marim’s business qualifications, meanwhile, include an MBA from the Pontifícia Universidade Católica and Project Management, of Rio’s Instituto Brasileiro de Engenharia de Custos; some legal training from Federal University in Brazil; an undergraduate business degree from the Universidade Candido Mendes, also in Rio; and UK advisory credentials that Marim says she’s in the process of studying to upgrade.
She has been working with Global Index’s clients and would-be clients since 2008.
Her willingness to spend time with clients “to listen to them” before “advising them appropriately” has created “huge long term trust and confidence”, Fleming says.
Although Marim was one of Global Index International’s star employees in her native Brazil, she says she and Fleming agreed that it made sense for her to relocate to Lisbon because it was increasingly obvious that it had become a “crossroads” for the firm’s clients.
Portugal, of course, has strong historical and economic ties with Brazil, in addition to sharing a language. But Marim points out that has other advantages as well, including a time zone that’s the same as the UK’s, and a southern European location that African and Middle Eastern clients find more convenient than either London or Brazil.
It is also removed from the problems Brazil is going through at the moment, geographically as well as economically.
“A lot of wealthy Angolans and Brazilians spent a lot of time [in Portugal] or have a second home here, and to my surprise, [many of] my French and British clients fly to Lisbon quite often as well,” Marim reports, almost a year into her new role.
“And if they are not staying in Lisbon, they pass through on their way to Africa, or the US or the Middle East. I probably have more client meetings at the airport than anywhere else.
“Just this past week I’ve had four there, including two British clients who’ve lived in Brazil for 40 years, a Brazilian with a business hub in Porto, and an Angolan on his way back to Angola from Zurich.”