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If a year ago you had asked Régis Burger, Managing Director and Head of Middle East and Africa at Swiss wealth management firm Julius Baer, if online meetings are as effective as face-to-face meetings, his answer would have been a firm “no”.

The wealth management industry — people focused and driven by personal relationships — is perhaps known for its traditional and conservative ways of operating, and in-person meetings are paramount. But the Covid-19 pandemic — and the social distancing measures put in place to contain the spread of the disease — has thrown old ways out the window and catalysed a move to digital that firms were beginning to embrace prior to the outbreak.

“The Covid-19 pandemic caused an unexpected disruption to the order of things, but propelled us to explore and embrace new ways of virtual interaction,” says Burger. “I don’t believe that the pandemic has fundamentally altered the industry’s strategic framework, in fact it has highlighted the resilience of the wealth management industry as a whole and supported in effectively leading the industry into the digital era.”

Régis Burger, Managing Director and Head of Middle East and Africa Image Credit: Supplied

Investing in tech

Wealth management firms quickly introduced new tools and practices to a wider clientele including video technology, digital onboarding, e-signatures, and payment instructions.

Julius Baer invested approximately CHF90 million (Dh370 million) in 2020 to improve digital and client-facing solutions, according to Burger.

And because the shift online happened in all areas of life — from keeping in touch with family and friends to remote schooling — wealth managers found their clients were mostly eager to learn and adapt.

At Mashreq Bank, the oldest privately owned bank in the UAE, management initiated a large-scale upgrade of wealth management systems, according to Vipul Kapur, Mashreq’s Managing Director and Head of Private Banking.

“They always say necessity is the mother of invention,” says Kapur. “And both from our clients’ point of view and our point of view, Covid-19 accelerated the ability to innovate and look at digital solutions for everything we do.”

Kapur reckons that digital adoption by clients now exceeds 80 per cent against less than 60 per cent prior to the outbreak.

Vipul Kapur, Mashreq’s Managing Director and Head of Private Banking Image Credit: Supplied

At HSBC UAE, the outbreak sped up not only existing digital developments but also mobile banking. “We made significant strides towards mobile-first propositions, which we are now in a great position to build on in 2021,” says Daniel Robinson, Head of Wealth and Personal Banking at HSBC UAE. “Even before the pandemic, all servicing required a digital solution to be competitive. Using video technology and digital signatures, our clients benefitted from being able to invest, redeem, and re-balance their portfolios all from the comfort of their homes.”

Perhaps somewhat counter-intuitively given the premium placed on in-person meetings, wealth managers found that the outbreak helped deepen their relationship with clients — especially those outside of the UAE. In previous times, a relationship manager would have travelled to meet a client two to four times a year. With video conferencing, interactions now take place several times a month.

“The period helped us develop stronger and more trusted relationships with our clients and supported us becoming even more relevant to them,” says Julius Baer’s Burger.

Daniel Robinson, Head of Wealth and Personal Banking at HSBC UAE Image Credit: Supplied

Client support

Mashreq’s Vipul agrees. Working digitally “has been great because it helped us not just to continue to provide that personalised service but also engage with clients at a time they wanted”, he says. “Without having to travel much you were able to meet with clients at any time during the day.”

He added that “relationship managers were available nearly 24/7 for clients.”

Given the market swings over the past year, clients have wanted reassurance and guidance.

“What has become clear during the pandemic is that many of ADIB’s wealth managers have developed stronger, trusted relationships with their clients based on astute financial advice and the provision of bespoke products that has enable them to navigate the market volatility of the last 12 months,” says Saif Al Alkeem, Head of Priority Banking, Wealth Management and Liabilities at ADIB, an Islamic Bank headquartered in Abu Dhabi.

As the situation normalises thanks to the roll-out of Covid-19 vaccines, the industry will retain the best element of both modes of operating.

Saif Al Alkeem, Head of Priority Banking, Wealth Management and Liabilities at ADIB Image Credit: Supplied

Hybrid model

“Wealth management will move towards a more hybrid model – adopting the real value of human advice complemented with the intelligence of automated systems and leaner processes,” says Julius Baer’s Burger.

Meanwhile, the wealth managers all expect the UAE to remain a hub for the wealthy despite the exodus of many expats. A September 2020 report by Oxford Economics predicted that the population of the UAE may fall by about 10 per cent.

The UAE has attracted 35,000 high-net-worth individuals (HNWI) over the past 20 years, according to  the latest New World Wealth  Report.

“Abu Dhabi and Dubai represent two of the most desirable cities for HNWIs,” says ADIB’s Al Alkeem, citing high-quality education and healthcare, high-end property, diverse recreation opportunities, and superb transport links.

Global hub 

HSBC plans to make the UAE a global hub for its international wealth management expertise given its “excellent access to some of the world’s corridors of business,” according to Robinson.

“The global wealth management industry is shifting its focus to the Middle East and Asia, and Dubai is well placed to help investors manage this realignment while continuing to serve the existing HNWIs who have been based in Dubai and the Gulf region for some time,” says Robinson.

HSBC recently opened its latest Private Banking business in the Abu Dhabi Global Market, complimenting the private bank’s existing office in the Dubai International Financial Centre.

“The new license and location [are] part of the bank’s plan to substantially grow its wealth management operations in the UAE and almost double its assets under management in the country,” Robinson adds.

Focus shifts to non-traditional assets
Investors in the Gulf who wanted stable cash flows have typically looked to fixed-income products to generate wealth. However, as interest rates remain low globally, wealth managers say investors are now exploring other asset classes. “Our clients look for generating wealth and yield from their investments,” says Mashreq’s Kapur. “With interest rates at all-time lows and lack of income opportunities from fixed-income securities, clients have used this opportunity to restructure their portfolios and move part of their funds into equity markets and multi-asset funds. They are taking advantage of the rising equity markets to generate wealth.”
This is something also noted by Burger at Julius Baer. “Due to the changing investment landscape, clients are now looking to generate wealth by focusing on non-traditional asset classes such as private equity,” he says.
He also notes that a new generation of investors wants to diversity away from oil and gas companies “and have a more tech focus in their investments.”
ADIB’s Al Alkeem agrees, saying he has seen “a desire from many clients to shift towards ESG investments, eschewing companies profiting from operations that are harmful to the environment”.
— Lianne Gutcher