August ‘2016, New Delhi
- With expats forming almost 75.6% of total HNW population in the UAE, wealth managers have tremendous growth opportunity in the future.
- However, the challenge for UAE wealth managers is to offer a holistic service proposition that can fulfill the needs of complex investment portfolios most expats in UAE have.
Ken Research has announced its latest publication on, ‘Wealth in the UAE: HNW Investors’, which offers a detailed analysis of UAE’s wealth management landscape. More precisely, the report profiles the average Emirati HNW investor along with analyzing the opportunities with respect to expats. The report also identifies which mandates and asset classes should wealth managers focus upon in order to fully capitalize on the expat opportunity.
In the past decade, UAE has become a hub for international trade with organizations from across the world establishing their offices there. In addition, UAE also attracts tremendous investment because of its position as the leader in the oil and gas industry. With a lot going on the investment front, UAE has become home for a large number of both High Net Worth (HNW) individuals and wealth and asset managers. In addition, to further make it easier for investors, the UAE government does not levy any corporate or personal income taxes at the emirate or federal level. Moreover, there is no exchange controls applied on the remittances of funds. On the political front as well, UAE is known to be highly stable and secure. Thus, UAE has earned tremendous reputation for being a safe investment haven for both locals and expats.
In UAE, private wealth investment is on a rise. Private wealth primarily includes deposits and cash, listed securities, money market funds, pension and life assets and other offshore and onshore assets. It does not include the investor’s own business, luxury good or real estate. As per some recent figures, private wealth in the UAE is expected to report a CAGR of 10.7% and reach almost USD 1 trillion by 2019. This is estimated on the basis that private wealth in UAE, driven by equities, grew by almost 8.4% in 2014. In addition, the ultra-High New Worth’s individual’s private wealth is expected to grow by 2.11% by the end of this decade.
Talking about the UAE investment landscape in terms of current trends, research has revealed that the Emirati HNWs either come from a service (earned income) or an entrepreneurial background. This means that there is increased demand for innovative investment solutions and the desire for gaining access to highly sophisticated investment products has also increased. Also, there is a general bent towards advisory mandates for discretionary or other types of asset management options. Overall, the HNW portfolio in UAE is well-balanced, with property and bonds accounting for the largest share of allocation followed by equities. However, the focus is expected to shift from properties towards equities in the coming five years. This is because, historic data reflects that, in the last three years the amount of private wealth held in equities grew by almost 13.8% as opposed to the 1.6% and 6.9% growth in bonds and other deposits respectively.
The Global Wealth Management Industry Trends
Wealth Management has been amongst one of the most appealing and growing sectors within the financial services industry. Over the past one year, the wealth management industry has grown steadily. However, with rising expansion has come significant challenges that are adding to the costs of doing the business. High Net Worth individuals across the globe are showing a change in attitude with a greater interest in alternative investment options that offer better profits at lower risks. Apart from this, the new regulatory framework, changing consumer preferences, digitization and very competitive landscape all add to the challenges for wealth managers.
Some of the important factors that the wealth managers will have to keep in mind include:
- Be on a constant lookout for new opportunities
- Rethinking and reviewing the firm’s value proposition
- Aiming at transparency to retain clients
- Going as digital as possible
- Adjusting costs structure as per revenue realities
Key Topics Covered in the Report:
- Detailed profile of Emirati HNW clients and their attitudes
- Critical success factors for wealth managers in the UAE
- Market landscape of Emirati wealth management industry
- Expat opportunities for wealth advisors in the UAE
- Emirati HNW’s investment style preferences
- Understanding the asset allocation trends among the Emirati HNW investors
- Emirati HNWs product and service demand
- The future outlook for Emirati HNW industry