But when you take into account that Brazil and the United States are roughly the same size, you get a clearer understanding of its scale.
Latin America consists of 33 countries across South America and the Caribbean. The vast majority speak Spanish, with Brazil the obvious Portuguese-speaking exception.
It is, perhaps, this homogeny of language that makes companies assume that breaking into one market means you have cracked them all.
But nothing could be further from the truth.
View from the outside
Leon Sears was working for life insurer Friends Provident International when he first ventured into Latin America, where he spent considerable time establishing the insurer in the region.
But FPI retreated from the market, which saw Sears join RL360 in 2014 – he is currently head of sales for the region, based in Panama.
“Miami is considered a hub of the Americas, so you would consider that the most northern point of Latin America,” he told International Adviser.
“The lowest point would be either Santiago or Buenos Aires. It’s a very long continent and each country has a different culture.”
He said companies have been unfocused in the past when it comes to making moves into the region.
“People have gone in with the frame of mind ‘we want to enter Latin America’. That’s fine, but you need a starting point. Where do we focus? You can’t just scattergun it.”
Putting your foot in it
Other common mistakes include assuming people will speak English and not appreciating the cultural differences between countries.
“Some get on with others, some not so well with others – and you have to understand that.”
Assuming you know how clients want to invest is another faux pas, according to Sears.
“There are countries that have very good local financial infrastructure and offerings. Don’t come in thinking that people will automatically want a hard currency or want to invest outside the country.
“That’s the wrong mindset. A lot of people actually prefer to invest in their own country or remain in their own currency.”
He added that companies should “not just take it for granted that people automatically want to buy what you are selling”.
Patience is key, said Sears, who has seen businesses come in “expecting to put their foot on the gas and go over 100 miles an hour straight away and bring in lots of business within three-to-six months”.
“It’s a slower lifestyle. People aren’t in a rush to do things.”
View from the inside
Being born in the UK, Sears has entered the market as an outsider. To get an insider’s perspective, IA reached out to Argentina-born Ariel Amigo, chief marketing and distribution officer at Investors Trust.
“We’ve seen interest in the region picking up recently. New companies coming in and companies that have left are returning,” he said.
When it comes to explaining this development, Amigo flagged up “two key drivers for our industry in the region; firstly, wealth creation; and secondly, and this is very, very important, is instability”.
Global headlines have been dominated by the unsettling developments in Venezuela of late; but both Brazil and Argentina, among others, have had their fair share of turbulence over the past few years.
“The economic and political instability generates the need for upper middle-class people with the means of savings to look for products that are not domestic, as they need to look for hard currencies.”
Three drivers of growth
International companies from three particular sectors seem to be in a particularly good position to benefit from the rising wealth in Latin America.
While countries like Mexico, Brazil and Argentina have strong domestic insurance companies with a track record of paying out; a lot of clients – because of the diversification of risk – will probably have two policies. One domestic and one offshore, Amigo said.
“You have some countries where the local health system in well-developed and they have private options that are very good. I can speak highly of Argentina, Brazil, Mexico and even Chile in some instances.
“But other markets don’t have either a public or a private system that will cover something serious happening to you or your family.”
Savings and wealth protection firms
“This is what we do at Investors Trust,” he said. “The emerging middle class didn’t used to have the means to do things like go on vacation, buy a car or get any type of insurance. But now, they have the chance to save.
“A trend that we have been seeing is they will set up savings plans offshore, in hard currency, to cover the possibility that their kids will study in the United States.”
Both Sears and Amigo agree strongly that relationships are what make or break companies in Latin America.
“Commitment is huge,” said Sears. “Our industry, international insurance and investments, has been going into Latin America for around maybe 35 years.
“A lot of the family-owned advisory firms are still around, some being run by sons and daughters, others are still by the original advisers.
“Memories last a long time and they commit to working with a company like RL360. Unfortunately, over the past few years, some companies have had to pull out of the region for various reasons. Sometimes it has taken a while to build that confidence back up again.”
“Over the years, people have been burned,” Amigo said. “There is a lack of trust in the marketplace from the distributors to the new companies, because they have seen American and European companies coming and going.
“At the end of the day, the agency is the one getting all the heat from the clients.”
Working with local advisory firms is a key strategy for RL360 and Investors Trust.
“Going after a Mexican client is not the same as going after a Peruvian client,” Amigo said.
“That’s something that, probably, the rest of the world doesn’t really take into consideration. They are totally different markets and you need to have local expertise.”
Investors Trust has a handful of key strategic partnerships with regulated, long-standing advisory firms in each country, with a few more in bigger markets like Brazil.
“Pricing, commission, terms of business are all important, but they are not the number one factor. Distribution here is very relationship based. That is the main asset in Latin America.”
When it comes to being successful in the region, Amigo highlighted two key points international firms could do well to heed.
“Some of the products that companies are introducing in Latin America right now are a little bit pricey. That’s something people look at, especially the agency. Some are well-priced, but others are a little bit expensive, if you ask me.
“And the other thing is service. With the internet and ease of access via your phone, companies need to have a very, very good response rate,” Amigo added.