Acceptable in the ’80s
“Like the UK in the early 1980s,” is how Rees describes Mexico in terms of international regulation. This is a key reason the duo say the big players such as Generali and Friends Provident have pulled away from Latin America.
“We are quite limited in Latin America with the life companies,” Davis says.
“Old Mutual pulled out of Latin America but it has a good local product based with Old Mutual Mexico,” Davis says. If other institutions follow the model set up by Old Mutual Mexico, Davis says many of them could return to the region with a local offering.
“I think that is the future. We will be working with local products in the local marketplace and with the international products with the international clients.”
The local products and banks are much more heavily regulated, but in terms of the products on offer the ’80s theme continues. “To give you an idea, they sell endowment policies,” Rees says. “They call them something else but they are the same product.”
For the time being, commissions are still the name of the game in Mexico, though it does have a hold-back scheme where the adviser is not paid the full commission upfront.
Adopting regulation similar to the UK’s retail distribution review, however, is still a very long way off. “It would be many years before they could introduce such stringent regulations here,” Davis says.
Dual markets
In terms of clients, International Advisor deals mainly with the growing Latin American expat market, but has also developed a local offering for clients that do not fit the criteria for an international product.
“There is a growing expat market here, especially with Brazilians, Venezuelans, and Colombians. The expat market is building here,” says Davis.
The bulk of their business is international. As much as 80-90% is regular savings, particularly retirement and education planning.
The level of sophistication required to sell the company’s international products and the duo’s commitment to providing UK-style self-regulated financial advice means the company tends recruit IFAs from the UK.
All members of staff who work for the company on a full-time basis are required to pass the Chartered Insurance Institute’s international qualification. For Davis and Rees this is a unique selling point for their business.
Davis says: “It is a great thing for business here – it really makes you stand out. It shows that our advisers are here for the long term and it is what they want to do.”
“We were the ones who introduced the international qualification to the Mexican market. We are proud of that,” Rees adds.
The climate, culture, and standard of living make Mexico City a great place to work all year round. It sits at 2,240 meters (7,350 ft) above sea level, meaning it is hot but humidity is never a problem.
But the perception of the country can make it difficult to get advisers to relocate from the UK. “This city is as safe as living in London, if not safer,” Davis says.
