ENRIQUE SOLÓRZANO

Mexico 2020 | FINANCE | VIP INTERVIEW

TBY talks to Enrique Solórzano, CEO of SURA Asset Management Mexico, on international strategy, pension funds, and increasing regional market share.

What role does Mexico play within SURA Asset Management's international business strategy in Latin America?

Grupo SURA has three main divisions: Asset management, Insurance and Banking. SURA Asset Management is the leading Pension Fund in Latin America with more than 18 million clients. Mexico plays an extremely important role in terms of results, revenues, sales and number of clients. It represents around 35% of the region´s total revenues for this business line and contributes approximately 8 million clients. In our growth strategy, Mexico represents a huge opportunity; not is it the largest country where SURA AM is present, its predominantly young population and growth space for increasing our market share (currently at 15%) makes it a very attractive market. We definitely have space to grow in Mexico. The pension system in Mexico was designed in the late 1990s, so we are slightly behind in the process of accumulating assets. Therefore, we are growing assets at a faster pace than in other countries.

SURA Asset Management is ranked fourth in pension funds in Mexico, but first in Latin America. What strategies is the group using to become number one in Mexico?

Afore SURA stands out from its competitors for its strong and solid investment professionals with a well- established investment process and long- term perspective. Afore SURA is the only pension fund to obtain a Morningstar Silver Analyst ranking for two consecutive years, the highest ranking Morningstar assigned during that period. Most of our competitors are part of major banks, insurance companies, and other financial institutions; there are few players with a core business in pension management, and Afore SURA is one of them. That differentiates us.

What is the value of being a non-bank pension fund manager?

We are professionals in this specific field; we are asset managers by nature and know this area well. For banks and some insurance companies, this segment is just an additional non-core business. For retailers, it is certainly non-core, it is just a complementary part of their main business. Asset management, however, is our core business. We have the methodology, philosophy, and experienced investment teams with a long term perspective, focused on helping our clients build their pension fund for a pleasant retirement.

What were SURA Asset Management Mexico's biggest achievements of 2019?

During 2019, the market performed extremely well both globally and in Mexico. In the pension funds business, we are concentrated in fixed-income assets as the local investment regulations stipulate. Interest rates in Mexico have decreased by close to 200 base points, which gave us a solid boost and performance. The whole system performed extremely well in 2019, with an average return of 15%. We surpassed that average by 100 base points. That is a great accomplishment and reflects the fact that we are asset managers and pay close attention to performing better than our competitors on a regular basis. The other achievement we are particularly proud of was that 2019 marked the fourth year that Afore SURA ranked as the #1 pension provider in Service, based on a survey by Consar, the Mexican regulator. Other important milestones include the creation of a more digital and agile culture, a dedicated team to assess ESG investments, and the affiliation of Afore SURA to the Principles for Responsible Investment initiative.

In what ways is SURA Asset Management Mexico trying to be one step ahead of others in terms of digitalization?

One of our top priorities is to be ahead in developing the best digital solutions that enable us to be nearer our clients to solve their needs in a more agile and convenient ways for them. We have significantly improved our clients experience by reducing the time clients had to spend using our services by 50%.

What strategies are you using to improve consumers' financial education in Mexico?

We see our main value offering as providing advice to our customers and supporting them in their financial decisions. We want to educate our clients regarding the importance of saving for their retirement, and there are many things they can do to improve their retirement fund. We use analytical tools and studies to look at how much and how often our clients save, and based on this information we provide them with better solutions and a more personalized advice. The level of informality is high in Mexico's labor market, employees actively contribute to their pension system less than 40% of the time during their entire careers. This is an extremely important issue, because the result is an important gap in their replacement rate. In SURA Asset Management we are aware of this situation and have significant efforts to extend our voluntary savings vehicles through digital platforms. Our growth rate for voluntary savings for the last five years has been around 42%, more than double the market average. We are highly committed to promoting such services to our client base to help them reach the retirement they desire.

What are your main goals and expectations for 2020?

SURA Asset Management Mexico has two business lines in Mexico: pensions and wealth management. In pensions, we will continue to improve our services and invest heavily in selling digitally and in financial education. We are fully committed with our clients to deliver the best returns possible in the market. In our wealth management business, we are still a small player in Mexico for individuals' wealth management but have great expectations to grow aggressively in this business. Our institutional investment management business is an important player in managing private pension funds and insurance companies reserves. We want to grow heavily in the personal wealth management segment, so we are developing a whole new business line. We are improving our product offering in terms of the quantity of products, open architecture, and more sophisticated products for the Mexican market. We have high expectations about penetrating this segment of the wealth management market. We currently have 0.42% of total market share in this segment and are projecting to grow this to 4-5% within five years.