BTG Pactual Review - MagnifyMoney
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BTG Pactual Review

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BTG Pactual is part of the Brazilian investment bank Banco BTG Pactual S.A. This specific division offers investment management to wealthy individuals and families, as well as to institutions, and over 90% of the group’s clients are non-United States persons. The New York-based firm’s team of roughly 20 advisors and researchers also counsels many private funds — in particular, BTG Pactual focuses on investing in timber and other tangible assets.

The bottom line: BTG Pactual manages the portfolios of primarily wealthy persons from outside of the United States.

  • Minimum investment is generally $1 million, although exceptions exist
  • Clients negotiate fees with their advisors
  • Sophisticated and ultra-wealthy investors have access to private funds

All information included in this profile is accurate as of October 20, 2021. For more information, please consult BTG Pactual’s website.

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Overview of BTG Pactual

Legally known as BTG Pactual Asset Management US, LLC, this group was originally founded in 2008 as a corporation and restructured in 2011 to become a limited liability company. The original predecessor firm Pactual, however, has roots back to 1983. Over the years, that firm grew and rebranded numerous times, including being owned for a stint by the large financial services firm UBS. Today, the group is part of the Brazilian investment bank Banco BTG Pactual S.A.

BTG Pactual has over 70 employees in total, including 21 who serve investment advisory or research roles. Together the team oversees more than $18 billion in assets.

BTG Pactual’s pros

  • Ability to navigate international borders: With over 90% of the group’s advisory clients being non-U.S. persons, the firm aims to help its international client base navigate the financial markets outside their countries. The team can handle everything from identifying investment opportunities to complying with local, regional and international rules.
  • ESG investing focus: In 2020, BTG Pactual created a sustainable & impact investing unit to focus on sustainable investment opportunities, particularly in Latin America. Clients interested in these characteristics can screen for and remove companies that don’t reflect their values, or specifically seek out ones promoting their personal beliefs.
  • Flexibility around client involvement: BTG Pactual allows clients to work with the firm through discretionary relationships, where clients give their advisors control over what and how much to trade, and don’t need to worry about signing off each transaction. On the other hand, clients can also set up non-discretionary accounts, where they must provide preapproval for all transactions before they’re executed and thus retain the final say.
  • Awards and accolades: The group and its parent company have won numerous awards for its private bank, as well as its technology, ESG services and other areas from organizations such as World Finance and Euro Money.

BTG Pactual’s cons

  • Potential conflicts of interest: Advisors at BTG Pactual can earn compensation from the sale of certain investment products. This revenue can incentivize advisors to recommend products that benefit them financially, creating a potential conflict of interest.
  • No financial planning offered: The firm’s public disclosures note that it does not provide financial planning services, such as helping families plan for their retirement or reach other financial goals. Advisors primarily focus on managing clients’ investments.
  • No set fee schedule: Clients should feel comfortable negotiating, since they’ll have to work out management and performance fees with their advisors. Because of this setup, you won’t know what you’ll pay without speaking to each advisor, which could make comparison shopping difficult.
  • Charges performance-based fees: BTG Pactual charges performance-based fees, where it’s awarded a share of the growth of client assets. Thus, in an attempt to increase the firm’s share of performance fees, advisors may recommend riskier investments than they otherwise would.

What types of clients does BTG Pactual serve?

Here are the types of clients typically served by BTG Pactual:

  • Individuals
  • Corporations or businesses
  • Pooled investment vehicles
  • State or municipal government entities
  • Insurance companies
  • Banking or thrift institutions
  • Other investment advisors

The firm serves individuals and families, as well as institutions. As for the breakdown of individuals versus institutions, the firm’s Form ADV notes a few dozen individual clients, and more than 100 corporations or businesses. Also on the client list are a small number of other groups, such as pension funds, insurance companies, foundations, endowments and other investment advisors.

All of the firm’s individual investors are considered non-high net worth — meaning they do not meet the U.S. Securities and Exchange Commission (SEC) definition of high net worth, which is having $750,000 under an advisor’s management or a net worth believed to be at least $1.5 million. However, the minimum investment generally required to open an advisor account is about $1 million — that being said, the firm does state that exceptions exist.

In addition, investors in the firm’s private funds are typically what’s known as accredited investors or qualified purchasers, meaning they generally are very sophisticated investors who meet certain wealth thresholds.

Services offered by BTG Pactual

For individual investors, BTG Pactual primarily provides portfolio management. The group doesn’t provide financial planning, which focuses more on helping clients reach financial goals like paying for retirement or saving for their child’s college education.

As previously mentioned, the team at BTG Pactual has experience investing in timber and other tangible assets. The team also offers clients ways to invest that address environmental, social and governance issues, noting on its website its belief that “it is possible to generate social and environmental impact and still guarantee solid financial returns and generate value for our customers, shareholders and society.” Specific industries where clients may be able to align their investments and values include health care, education, housing, sanitation, renewable energy and food security.

The firm also provides advice to many private funds.

Here is a rundown of the services offered by BTG Pactual Asset Management US, LLC:

  • Portfolio management for individuals and small businesses
  • Portfolio management for businesses or institutions
  • Portfolio management for pooled investment vehicles

How BTG Pactual invests your money

Most clients work with their BTG Pactual advisors through a discretionary relationship, meaning advisors have the power to place trades in the client’s account without the client needing to sign off on each transaction. The firm does have a small portion of assets under management in non-discretionary accounts, where the client must give the final approval before a trade is made.

Advisors create custom accounts based on the client’s strategy and restrictions. In general, the team uses active management as opposed to index funds, meaning it attempts to earn returns above market averages. To make investment decisions, the group relies on both a micro look at the investment fundamentals and a larger macro analysis of broader issues, such as the regional and global economy, asset flows and other big picture data points.

As for specific investments, advisors may recommend both traditional and alternative investments including equities, bonds, mutual funds, hedge funds and private equity funds. Certain products, such as some mutual funds, may be affiliated with the firm.

Fees BTG Pactual charges for its services

For discretionary accounts, clients pay a management fee — a set fee regardless of how well the account performs — as well as a performance-based fee, which is generally a share of any growth the account earns. The amount of both fees is negotiated between the advisor and client, and no standard fee schedule exists. According to the firm’s brochure, factors that may determine the fees are the account size, complexity and strategy.

For non-discretionary accounts, the custodian bank that holds the client’s money typically pays BTG Pactual a set percentage of the revenues generated by the account.

Keep in mind that clients can still owe additional investment-related fees on top of the management and performance-based fees, such as brokerage or custodian fees or affiliated and third party product fees.

Clients can be billed for their fees or have them deducted from their accounts.

BTG Pactual disciplinary disclosures

BTG Pactual Asset Management US, LLC reports disciplinary disclosures. For reference, the SEC requires all registered investment advisory firms to disclose to the public on their Form ADV all legal and disciplinary actions against the firms and their employees and affiliates. Reportable actions include criminal, civil and regulatory events over the prior decade that potential clients would find material when evaluating the firms or the integrity of their leaders.

BTG Pactual details the following issues on its Form ADV:

  • In 2013, Banco BTG Pactual S.A. paid a $12,500 fine and the former CEO Andre Santos Esteves a $50,000 fine after the Central Bank of Brazil alleged that from 2002 to 2004 the bank executed trades that were negative for the bank and beneficial for a certain foreign investor. The parties agreed to pay the fines and not appeal the decision, as they considered the fines minimal.
  • In 2014, BTG Pactual (UK) paid a €25,000 fine after it reported information about a short sale position late.
  • In 2015, parent firm Banco BTG Pactual S.A. paid a $50,000 fine to the New York Mercantile Exchange after a trader engaged in what is called spoofing, which is prohibited.

Separately, the firm discloses that in 2014 the former CEO of the larger Banco BTG Pactual S.A, André Santos Esteves, paid to the Swiss Federal Department of Finance a CHF 250,000 payment after the department alleged that in 2011 Mr. Esteves failed to disclose in statements made to a Swiss regulator information about an investigation in Italy by Italian financial regulators. The payment is not considered a fine nor a formal finding or sanction.

To learn more about BTG Pactual’s disciplinary history, view its Form ADV and brochure available on its IAPD page.

BTG Pactual onboarding process

If you’re interested in investing with BTG Pactual, you can reach out to the firm in the following ways:

  • Provide your info and have the firm contact you: On the top right corner of the firm website, click the “Open Your Account tab,” which will ask you to input your contact information. Once you do, someone from the firm will be in touch.
  • Contact the firm directly: You may also reach out directly to the group’s wealth management division, which has offices in Miami and New York. The phone number is 212-293-4600.

Once you’re up and running, your portfolio will be reviewed periodically by wealth management staff members and account managers. You have the option to receive either monthly or quarterly reports, and you also can view your accounts online anytime.

Where BTG Pactual is located

BTG Pactual Asset Management has seven offices in total in the following cities:

  • Madison, Ala.
  • Monticello, Ark.
  • Stamford, Conn.
  • Miami
  • Atlanta
  • New York
  • Columbia, S.C.

Is BTG Pactual right for you?

BTG Pactual serves a specific niche. It helps an international clientele, as well as some U.S. residents — most of whom are wealthy — manage their investment portfolios across country lines. The firm particularly deserves a look if you’re interested in investing in environmental, social or governance issues in Latin America, or in timber and other tangible assets, since the team markets its expertise in those areas.

Investors who don’t fit that profile, or those interested in financial planning services such as buying insurance, planning for retirement or paying for college, may want to find another advisory firm that can help plan for those goals. You also may want to look elsewhere if you want a firm that has a set published fee schedule, or one that is paid only by you and not also by investment companies for selling their products.

The services offered by registered investment advisory firms and how they’re paid can vary greatly, so be sure you understand specifically how each advisor you’re considering operates. To find advisors that suit your unique needs, start with the MagnifyMoney advisor search tool.

The “Find a Financial Advisor” links contained in this article will direct you to webpages devoted to MagnifyMoney Advisor (“MMA”). After completing a brief questionnaire, you will be matched with certain financial advisers who participate in MMA’s referral program, which may or may not include the investment advisers discussed.