Dubai: Western expatriates in the UAE appear to be less prudent than their counterparts in Singapore and Hong Kong when it comes to financial planning, with almost all respondents in a survey saying that they spend some of their disposable income on luxurious lifestyle choices and a much fewer number seek independent financial advice.
About 97 per cent of UAE-based western expatriates spend some of their disposable income on lavish items compared to 51 per cent in Singapore and 47 per cent in Hong Kong. But at the same time 94 per cent did say that they also put away some of that income into investments and savings, according to the survey released yesterday, which was conducted in August 2013 by Standard Life International in association with Insight Discovery.
“In some ways, [UAE’s western expats] are hedonistic conservatives,” said Chris Divito, chief executive of Standard Life International Private Limited (DIFC) during a phone interview. Also, there’s certainly a differential within the UAE’s survey population when it comes to independent financial advice. A significant smaller number of people seek financial advice at all compared to consulting with the family members.”
Just 31 per cent of the same group of expatriates here seek advice from independent advisers compared to 49 per cent in Singapore and 53 per cent in Hong Kong.
“It could well be that such a low number opting for independent advice is just a consequence of not knowing where to go,” said Divito.
And with regard to equity investments, compared to 71 per cent of Hong Kong’s western expatriates investing in equities, only nine per cent of respondents in the UAE prefer the same. However, 70 per cent of the UAE group said that they do invest in mutual funds and 46 per cent said they invest their disposable income in long term investment plans. And 47 per cent said they put away part of their income in retirement plans.
“So, when it comes to UAE’s western expatriates in the survey, there’s both good news and bad,” said Divito.
“The good news is a very high percentage of the population [in the survey] is saving or putting money away on a regular basis. And a higher relative percentage is saving for their long-term future and specifically for their retirement. So from a UAE perspective, that’s a good position for the western expats to be in. In terms of the bad news aspect of it, I would say it’s the low percentage consulting for independent financial advice.”
About 80 per cent of the respondents in the UAE were under the age of 45. The expectation would be that these cohort will have a longer term investment attitude, which would obviously then seem to push them towards investing in equities over the longer horizon. In spite of that they don’t seem to be taking the plunge into equities.
“You can draw a parallel potentially there between the lack of independent financial advice and the low preference for equities,” said Divito, “because any good professional adviser would know that in the longer term, equities do tend to give you a better risk-adjusted return over time.”
The number of western expatriates surveyed in the UAE was 400 and 100 each in Hong Kong and Singapore. The household income range varied, with the minimum set at $6500 (Dh23,907). And the majority of the respondents in all three countries came from the UK, with others comprising of Australians, New Zealanders, and other western expatriates, including from various European countries.