November 12, 2015

A Brazilian Perspective

A Brazilian Perspective

"Generation Lost: Engaging Millennials with Retirement Saving" is a new study by BNY Mellon and Cambridge Judge Business School, University of Cambridge that surveyed 1,253 millennials between July and September this year. In this extract from the study, BNY Mellon’s Adriano Koelle, Chairman of Latin America and Country Executive for Brazil, gives a perspective from Brazil.

Millennials in Brazil are less likely to be contacted by their employer/school regarding long-term savings than in other countries in the survey. At least half of them get no information or guidance on these issues. This presents a huge opportunity for banks, insurers and other institutions to develop financial planning and awareness locally. We see some initiatives in place, but not enough, and those that exist are not penetrating all social layers.

There also seems to be no nudge in Brazil towards outcomes that are better for people. Yet this generation needs these simple pushes to get them to think and act differently. Parents could be encouraged to incentivise Millennials to take a more active role in domestic financial planning. And employers could be more proactive in making joining the workplace pension scheme the default position, with the option of leaving if desired.

There are also specific factors impacting our market. Firstly, there is a strong risk aversion among investors. Brazilians are very income driven, and due to historically high local interest rates our allocation to fixed income is particularly high. Moreover, if financial products such as the traditional Brazilian PGBLs (401k-like plans) were made more attractive, people would be more interested in them. And our current market suffers from a lack of diversification, as products are mostly invested in domestic assets.

There is a great opportunity for change and numerous ways it can be achieved. Focusing on financial education and behavioural nudges can make a real difference.

To view the report, please click here.




Malcolm Borthwick
+44 (0)20 7163 4109