From increased awareness among investors to rise in transparency through technologies and the evolving wealth management solutions, the wealth management sector is accelerating. Here industry experts elaborate on its outlook:
During the next 20 years, the global wealth transfer between generations is expected to be the largest ever experienced in human history (estimated in the trillions of US Dollars). It has already begun and many clients, some new to investing, are seeking guidance from professional wealth managers. As the regulatory environment continues to adapt, so too do the investment requirements from clients; today, more than ever, many clients are concerned with sustainability and ethical investing, commonly referred to as ESG. Clients want to generate returns from impactful investments, and this is a growing trend that we expect to expand. Also, with the return of equity market volatility, many clients are looking to safeguard their capital and have started balancing their portfolios so as not to be exclusively exposed to volatile asset classes.
Dr Tariq Bin Hendi, Executive Vice President and Head of Products & Advisory for Retail Banking & Wealth Management, Emirates NBD Group
Innovation and value creation for client
Driven by oil prices and a gradual upward shift in the yield curve, we believe, the wealth management sector in UAE is expected to perform at above average in 2019 (compared to recent years). However, the uncertainty in the global stock markets and geopolitical situations may keep this growth under check. Also, the industry needs to adapt not only to the changing behaviours of clients but also to the evolving demographics of the HNI and UHNI customers. Clients today are asking for shorter duration investments with limited variables coupled with definitive performance and proven track record of the money managers. Customers today are okay to take the higher risk on their investments in lieu of the timeline, i.e. they are equating longer duration to higher risk due to global unpredictability. The success of wealth management platforms will depend on innovation and value creation for clients, demonstrated in the products as well as the distribution network.
Renoy Kundukulam, Head of Wealth Management, Noor Bank
Improved investment ecosystem
Over the past few years, the UAE has witnessed sustained improvement in its financial service infrastructure and regulatory framework, and is fast emerging as a globally competitive wealth management centre. At ADIB, we have been heavily investing in this sector, offering our clients various products and services, as we see this particular segment of clients to continue growing in the future. Through the propositions that we offer, whether it’s private banking for the ultra-high net worth individuals or the priority banking, the services we provide have already helped us see these segments grow and expand. With the advent of new regulations and an improved investment ecosystem, we expect the UAE to continue attracting more private wealth from global HNWIs.
Saif Al Alkeem, head of priority banking and WM at ADIB
The Wealth Management Sector in the UAE is in for an overhaul for sure. The year 2019 will be a game changer when the commission and fee disclosure will be mandatory for all policies issued from the jurisdiction of Isle of Man. Once the disclosure comes into effect, the clients will be in a better position to compare the products not only from the value perspective but also from the cost. I believe other jurisdictions will evaluate the outcome of the new law before they decide to join the league. Going forward wealth management will not be as simple as it sounds, the clients will expect a clear value addition from the advisers. With the current UAE government’s approval for visa extension for qualified expatriates over the age of 55 years, there will be a demand for good retirement products to suit individual needs. You may see new product launches in the retirement space.
Dilip B M, Senior Wealth Architect, Elixir Wealth Solutions
The wealth management industry in UAE is going through a paradigm shift in the last few years due to disruptive technology, increasing regulations, the positive impact of visa reforms. Machine Learning, Data Science and AI, are disrupting the wealth management industry by enhancing operations, improving processes and reducing costs considerably. Thanks to comparison websites, financial blogs and social media, the awareness of an average investor are snowballing. They now have access to real-time information, mostly free, which was only available to a select few in the past. Evolving wealth management solutions and increased awareness among investors is accelerating the growth of the wealth management industry globally. UAE is fast emerging as a globally competitive wealth management domicile. The Securities and Commodities Authority(SCA), UAE Insurance Authority(IA) and The Dubai Financial Services Authority (DFSA) are striving to protect investor interests by continually enhancing the regulatory framework and infrastructure. The recent reforms for visa and foreign ownership further encourage a broader range of investors to accumulate and grow wealth in UAE.
Damodhar Mata, Senior Consultant and Financial Planner, Nexus Insurance Brokers