Brasilprev sees low-interest environment as financial education opportunity

Pension plan providers in Brazil are today faced with a new operating environment that includes record-low interest rates and attempts by the government to push a major pension reform through congress.

Brasilprev, which is a joint venture between Banco do Brasil and US-based Principal Financial Group, is one of the leading players in the country's private pension industry and in January it appointed Walter Malieni Júnior as new CEO.

In an interview, BNamericas talked with Malieni about the main industry and company-specific issues that Brasilprev is facing in the next few years.

BNamericas: Can you talk about your expectations for 2019?

Malieni: For 2019 our expectation is positive for both our operations and for the approval of the pension reform.

I think we have a range of products that are adequate for our customers.

Right now our main mission is to become a simpler and more direct financial and welfare advisor by having more products that actually respond to people's life cycle.

This is a big challenge because we want to turn a complex service into something palatable to everyone, having compatible products for all stages of our customers' lives.

BNamericas: Can you provide details about Brasilprev's business strategy?

Malieni: Our client base is likely to increase and this should be widespread across all income levels.

Where we are going to work more is in the retention of our existing clients, taking a more proactive stance in the relationship with these clients.

Currently we have about 2mn customers and we can grow more. Brasilprev works in a B2B model due to the strength of our existing distribution channel; now we want to become a B2C company.

BNamericas: The central bank already indicated that it is likely to keep the Selic base interest rate at low levels throughout the year. What is the effect of this for Brasilprev and other companies in the pension market?

Malieni: With the Selic being kept at low levels as we currently have seen, we will have to work more in terms of advising our clients, understanding the way they are making their investments. We should seek a better risk and return balance.

In Brazil, during many years people associated the act of investing with putting money into fixed-income instruments linked to government bonds. Now we have possibility to make clients aware that there are other [investment] options. 

We will have to provide financial education regarding pensions and people's retirement. We have to show customers that it is normal to have fluctuations in assets over long investment periods.

BNamericas: The financial industry in Brazil has invested heavily in digital operations. What is Brasilprev doing in this area?

Malieni: We have already developed an app, but I confess that we still have a major challenge going forward in taking better advantage of all our customer data.

We need to know how to do read this better in order to understand the profile of our client base so we can create a more efficient relationship with customers. This is a medium-term challenge.

BNamericas: Brasilprev is a joint venture between Banco do Brasil and Principal. Since January, Banco do Brasil has a new CEO and do you believe the bank's new leadership will bring any change to the partnership?

Malieni I don't believe in such changes and I will explain the reasons.

On the one hand, we have a partner [Banco do Brasil] that has a great distribution channel spread all over Brazil. Our other partner [Principal] has a presence in 18 countries, including Brazil.

With these two partners we have the combination of an effective product distribution and the knowledge of other countries, which have already undergone pension reform and which have a stronger culture of retirement savings. The result of the association of these companies is an ability to capture enormous synergies.