Dubai: Personal wealth held by UAE residents surged to $400 billion between 2014 and 2019, with 48.5 per cent of it held by millionaires in 2019, according to Boston Consulting Group (BCG).
The consultancy reckons the ranks of UAE’s millionaires are expected to grow by 4.2 per cent annually over the coming four years. The UAE represented 7.1 per cent of the share of personal wealth pool in 2019 in the Middle East and Africa, having grown by 3.8 per cent annually to $400 billion between 2014-19. It is about 20 per cent of GCC’s personal wealth.
Currency and deposits represented the country’s largest onshore asset class, accounting for 69.2 per cent of total personal wealth in 2019, while life insurance and pensions are expected to grow the fastest - at 7.1 per cent through 2024.
“Despite the current economic decline and precarious outlook globally for the coming years, estimates indicate the UAE will still record sustainable growth across several areas within the wealth segment,” said Mustafa Bosca, Managing Director and Partner, BCG. The consultancy brought out its ‘Global Wealth 2020: The Future of Wealth Management—A CEO Agenda' on Monday.
Changing perspectives
The consultancy says the wealth management industry's value proposition will change over the next two decades, new forms of interaction will evolve, as well as new business models.
In the report, BCG outlines three potential scenarios for post-COVID-19 growth - a quick rebound, slow recovery, and lasting damage. Regardless of which scenario emerges, wealth management providers are likely to face more pressure. Many were already in challenging positions before COVID-19.
Client needs and expectations are changing at an accelerated pace, the competition is intensifying, and cost-to-income ratios have been significantly higher than prior to the previous financial crisis – 77 per cent in 2018 compared with 60 perc ent in 2007.
“With the uncertainty and unpredictability surrounding the economic climate, wealth managers and CEOs should immediately begin strategizing for each of the scenarios outlined,” said Bosca. “Regardless of likelihood in terms of one transpiring and the other two not, it is important to have contingencies in place for every potential occurrence.
"Difficult times are undoubtedly ahead, and measures must be taken, so they are able to navigate through the impending period.”
