RIO DE JANEIRO, BRAZIL – It was not only the number of investors that soared in recent years. The number of professionals who serve them has also greatly increased.
The month of April closed with 14,400 accredited independent brokers, according to data from the National Association of Brokerage Houses and Distributors (ANCORD). The number includes only individuals, not offices.
There were 1,616 new independent brokers added to the system in the first four months of the year – a little more than half of new registrations recorded during the whole of 2020, which totaled 3,179 and set a record.
Compared to December 2019, the current number of accredited independent brokers grew by 50%. When compared to December 2018, when there were only 6,634 registered professionals, the increase is 117%.
“The marked increase had been occurring for a few years, but it really took off since the start of the pandemic,” says Orlando Junior, head of ANCORD’s certification and accreditation area for independent brokers. “Interest rates dropped and investors had to look for alternatives. With everyone indoors, actively accessing online content, the financial market drew attention and independent brokers also gained visibility.”
Expectations are high between now and the end of the year: Orlando Junior believes that another 5,000 to 6,000 independent brokers will be accredited.
Considering that an independent broker serves 80 to 100 clients, there should be demand for approximately 30,000 to 40,000 new brokers within the next five years,” says Caio Peres, XP’s head of expansion, which has contracts with about 80% of these professionals in Brazil.
Although the regulation allows independent brokers to be accredited by presenting a high school diploma, all new professionals registered this year have completed at least a university degree. According to ANCORD, 72% of them have a college degree, 23% have a post-graduate degree, 4% have a master’s degree, and about 1% have a doctorate or post-doctorate.
The independent broker’s role
Of the currently accredited independent brokers, 11,406 – or 80% – are linked to a financial institution. This means that they are the ones who are effectively in activity. According to the Securities and Exchange Commission of Brazil (CVM) rules, independent brokers are agents of brokerage houses and distributors, and may only operate if linked to one of them.
The role of the independent broker, as explained by CVM, is to prospect and attract clients to financial institutions, in addition to receiving and registering investors’ orders and providing information about the products offered.
According to the CVM, independent brokers are not allowed to provide portfolio management, consultancy or securities analysis services. In addition, they are not allowed to use passwords for exclusive use of clients to send orders, nor are they allowed to produce and send to clients statements containing information about operations performed or open positions.
The CVM advises that, before investing through an independent broker, investors should ensure that the agent is accredited and contracted by the broker or distributor through which they intend to invest their funds. This can be done in two ways: on the CVM or on ANCORD’s website, under “Public Consultation”.
“In addition, investors need to be aware that the independent broker is not a securities consultant,” stressed the agency. “Although they have among their duties the task of providing information about investment products, they are representatives of financial institutions. Investors should be aware that they need to consider the information and make their own investment decisions.”
According to XP’s Peres, there is a big difference between helping someone make an investment decision and deciding for them. “New investors want to take another step, and to do so they need to have a complete understanding of financial products. This is how the independent broker operates, helping clients understand them.”
The CVM’s regulatory agenda for 2021 foresees the holding of a public hearing on the regulation of the independent broker’s activity, but there is no date yet set for this to take place.
Source: Infomoney