Dubai: Growing their business remains the primary and dominant goal for high net worth business owners in the Middle East, according to a recent study on the wealth management needs and preferences of high net worth (HNW) business owners in Asia, Africa and the Middle East.
The report by Standard Chartered Private Bank and Campden Wealth Research surveyed stakeholders in family businesses with a 2012 turnover and family net worth in excess of $100 million, as well as stakeholders in non-family businesses with a 2012 turnover and individual net worth in excess of $25 million across Asia, Middle East and Africa.
The study showed that 82 per cent of Middle East based high net worth business owners surveyed have already internationalised their businesses compared to 58 per cent of Asian businesses and 42 per cent of African businesses implying the need for international banking services that support the geographic reach and growth of these businesses.
An overwhelming majority (85 per cent) of respondents are heavily involved in the daily management and financial affairs of their business. Together with the main focus on growing their business, this leaves less time for personal wealth strategies, including planning for the eventual transfer of wealth.
“This research reveals the dynamics of business and personal wealth of this new segment of wealthy individuals, and hopefully generates thought and discussion on how private banks can adapt to serve them better,” said Michael Benz, Global Head, Private Banking Clients, Standard Chartered Private Bank.
Increasing market share is the top growth objective (82 per cent) of participants and said it was (important or very important) for business owners in all regions. This was followed by increasing production capacity (65 per cent) and international expansion (58 per cent).
International expansion
With nearly 60 per cent viewing international expansion as an important or a very important business objective, HNW business owners are looking to go global. In fact, 82 per cent of Middle East businesses are already internationalised, compared to 58 per cent of Asian businesses and 42 per cent of African businesses.
The study shows that HNW business owners are reactive, rather than proactive, in ensuring the professionalism and transparency of their businesses. Governance and formal planning are secondary considerations and remain in their infancy; only around half of those surveyed have a formal governance structure in place. However, the research observed that as businesses mature, professionalism increases in priority and importance.
When it comes to planning for the transfer of their personal wealth, an average of almost half the respondents lacked formal plans to transfer their wealth to the next generation. In wealth planning for the next generation, private banks are not the main go-to partner. More than 85 per cent of respondents consult lawyers and accountants about wealth planning and only 50 per cent discussed these issues with their private bank. For example, close to half of all survey participants said they would not expect to use their bank for advice on insurance products, retirement planning, or planning for their children’s education, indicating that more awareness or education is needed around these products and services.
