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Investors Trust
Investors Trust
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Philip Story, head of distribution, EMEA at Investors Trust
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Central Park Towers, Dubai
PS: It has been phenomenal. We moved to Central Park towers in the DIFC. It is right at the end of the DIFC so it is quite easy to get in and out of. We have a lot more space as well, a nice boardroom that, since the reopening, has been used a lot by some of the IFAs for team meetings. It is a fabulous space and has really great views of the Burj Khalifa and all the tech you need to hold meetings.
The team that moved in two years ago with me are all still there and we recently brought on a new addition to support the CIS brokers that we work with, so we continue to grow that area.
GR: Regarding the Middle East, what do you see a the biggest challenge for the next year for Investors Trust, and what is the biggest challenge for advisers in the region?
PS: That is a big question. For us, with the IT and the tech we have, we are way ahead of our competitors [at the moment]. But it’s also all about staying ahead.
Simplifying the processes to make it easier for the adviser, ie going even more paper free. If you take up less of the adviser’s time with these processes, then you free up more time for them to see clients.
A lot of our competition are now focusing more on technology and some have deep pockets, so we need to focus on what we are good at – having that 15 years’ experience on the IT front, being online, the security and the 24/7, 365 nature of our system.
The other challenge is keeping up with the growth. I was talking to our team about this the other day, about how many terms of business that we have set up with new adviser companies in the last six to nine months. It has been a crazy hectic period getting everyone up to speed and trained on our products and systems.
We have some brilliant new companies onboarded and we need to keep working hard to keep that growth we have had in H1 into H2 and beyond.
GR: And for advisers? What challenge does 2021 bring generally? Is it as simple a change to the model or is it more complex?
PS: It is difficult [to generalise], as lots of advisers have different challenges. But overall, it is adapting to regulation and the changes, making sure all licenses that they need to have are in place and also looking at the model they are going to work with.
A lot of our key advisers are aiming to move up the food change into the HNWI space. Those that have focused on the smaller premiums [in the past] will find this more difficult. For these smaller premium cases I believe that a lot of that might move direct online sales as it will not be profitable to provide a full wealth management service at lower premium levels. From what I hear, a lot of protection business is moving online because it is easier to do it online.
So, I think if you look at the IFA business strategies, a lot of advisers are trying to up-skill, with the CII and CISI training and qualifications, which is great news, and they are also really focussing on that move to HNWI clients, tax planning trust planning that HNWI clients need.
Another big challenge for the advisory companies at the moment appears to be with advisers moving around a lot at the moment, therefore advisory companies and having to fight to retain those advisers and show them what value that they can offer them.
GR: Finally, what will the future of travel and meetings look like. What is the new normal?
PS: Yes, getting back to normal will be getting back to the new normal. I was in Cyprus the other week and I was one of the first that was able to get back to Cyprus from the Insurance companies.
Being able to see them online has really helped tremendously but those F2F relationships really do matter. To be able to have those conversations that you might not have online, where you can have a coffee or a drink in the evening, these are really important for business development.
These conversations can sometimes bring up an unexpected new idea that helps an adviser grow their business. Online you have more of agenda, so these in-person, F2F meetings are fantastic at adding value. They provide more feedback on how we can support the advisers and hopefully we come up with more ideas for the future following these chats.
Will it mean I’ll be traveling and flying around as much as I used to? Probably not, which is a shame as I love traveling. But fewer trips and more online is the new normal for us in 2021 and 2022.
I’m looking forward to more new trips in the coming months to catch up with people and find ways that we can really add value to the advisers and brokers that we work with.
GR: How are things going for Investors Trust in the Middle East at the moment?
PS: It has been very, very good. We’ve been very lucky over the last couple of years with the (established) online business, it really has helped. Being online for the last 15 years means it is nice and secure and it works so that really helps drive business as everyone has been locked down and stuck at home.
It has helped that we have just been able to carry doing what we do. Working that way alongside online meetings, you can do everything that you need to with online writing of the business as well, it helps enormously.
GR: So in many respects (in life offices years at least) has being set up as a relatively new company and having that tech side already in place has proven an advantage?
PS: It has. If you look at the different regions the approach around covid has been very different. If you look at the Middle East and UAE, the approach that each of the countries has taken it has been very different. UAE is very internationally-linked whether it is for business or for tourism it has been very forward thinking, really driving forward with the vaccine.
Being number one or number two in the world for he number of people vaccinated has helped the UAE to become even more of a hub than it was previously.
We know a number of advisers who have moved here as it is much easier to do business here. Particularly from Qatar, Lebanon etc. Lebanon has had other difficulties a well. But Oman and Bahrain have also struggled because they don’t have the financial clout, of, say, a Saudi and UAE for job retention, so it has been difficult for them.
It creates challenges for some and opportunities for others. The good thing about our model is that to work with as many advisers in as many different locations as we can, you average out the ups and the downs and hopefully we can help more get through this period.
GR: How has the ‘traditional’ UAE adviser coped with the pandemic? Especially on top of the with the regulatory changes from last year (ie BOD-49) really kicking in?
The big one was, of course, BOD-49 but there has been more recently with ESCA and the central banks re disclosures and transparency. These changes are coming in UAE and obviously in other regions as well. We work with advisers in Europe for example who have had the challenge of Brexit. And the adviser businesses there that were maybe passporting from the UK or vice versa, where those links have stopped.
There are two approaches to that those that were forward thinking that looked at this 2, 3 even 4 years ago and changed their business model so that renewal and trail income was built up and that secure income was coming in. Many were also building up their AUM as these models changed.
[But], some thought it might never happen as the Middle East has traditionally been very slow at change. But these things have happened and are happening more frequently. So those that stuck their head in the sand are not finding it is easy right now.
GR: This region that you (and your team) cover is across a very wide area - ie most of the world with Europe ME, India, Africa. How are things going with the team and the reasonably new office space? The last time I saw you in Dubai was at the end of 2019 and you were just getting settled in. But the pandemic followed soon after. So how are things settling now?
PS: It has been phenomenal. We moved to Central Park towers in the DIFC. It is right at the end of the DIFC so it is quite easy to get in and out of. We have a lot more space as well a nice board that, since the reopening, so it has been used quite a lot by some of he IFAs for meetings.
It is a nice space and has really nice views of the Burj Khalifer and the tech to hold meetings.
The team that started two years ago are all still there and we recently brought in a new addition recently to support the CIS brokers that we work with, so we continue to grow that area.
GR: Regarding the Middle East, what do you see a thew biggest challenge for this next year for Investors Trust And secondly, what is the biggest challenge for advisers in the region?
PS: That is a big question. For us, with the IT and the tech we have we are probably way ahead of others [at the moment]. But it also all about staying ahead.
Simplifying the processes to make it easier on the adviser, ie. going paperless etc. If you take up less of the adviser’s time with these processes then you free up more time for them to see clients. It is a big challenge.
A lot of competition are now focussing more in that area and some may have deep pockets so we need to focus on what we are good at – having that 15 years experience on the IT front, being online, the security and the 24/7, 365 nature of our system.
The other challenge is keeping up with the growth. I was talking to our team about this the other day, about how many terms of business that we have set up with new adviser companies in the last 6-9 months. It has been a crazy hectic six months period getting everyone up to date and trained.
We have some brilliant new companies on board and we need to keep working hard to keep that growth we have had in H1 into H2 and beyond.
GR: And for advisers? What challenge does 2021 bring generally? Is it as simple a change the model or is it more complex?
PS: It is difficult [to generalise], as lots of advisers have different challenges. But overall, more generally speaking, it is adapting to regulation and the changes, making sure all licenses that they need to have are in place and also looking at the model they are going to work with.
In other places a lot of key advisers move up the food change into the HNWI space. Those that have focused on the smaller premiums [in the past] it will be more difficult. A lot of that might move online. Speaking to the protection companies, a lot more are moving online because it is easier to do it online.
So I think if you look at the business strategies a lot of advisers are trying to up-skill, with the CII and CISI training really focussing on the region here on those that move to HNWI clients, tax planning trust planning that HNWI clients need.
There is the up-skilling of the the advisers to that level and then retaining these advisers.
It is a big challenge for the advisers companies with advisers are moving around a lot at the moment, with the advisory company needed to retain those advisers and show them what value that they can offer them.
GR: Finally, what will the future of travel and meetings look like. What is new normal?
PS: Yes getting back to normal will be getting back to the new normal. I was in Cyprus the other week and I was one of the first that was able to get back to Cyprus from the Insurance companies.
Being able to see them online has really helped but those f2f relationships really do matter. To be able to have those conversations that you might not have online where you can have a coffee or a drink in the evening, these are really important.
These conversations can sometime bring up an unexpected new idea that really helps an adviser grow their business. Online you have more of agenda, so those F2F meeting are fantastic. They provides more feedback how we can support the advisers and hopefully we come up with more ideas for the future following these chats.
Will it mean I’ll be traveling and flying around as much as I used to? Probably not, which is a shame as I love traveling. But fewer trips and more online is the new normal for us in 2021 and 2022.
I’m looking forward to more new trips in the coming months and setting those up to catch up with people and find way that we can really add value to the advisers and brokers that we work with.
There are two approaches to these changes – the more forward-thinking IFAs looked at this two, three or even four years ago and changed their business model so that renewal and trail income was built up and that secure income was coming in. Many were also building up their AUM as well.
[But], some thought it might never happen as the Middle East has traditionally been very slow with any change. But these things have happened and are happening more frequently, so those that stuck their head in the sand are not finding it as easy right now.
GR: This region that you (and your team) cover is across a very wide area - ie with Europe, Middle East, India, Africa. How are things going with the team and the reasonably new office space? The last time I saw you in Dubai was at the end of 2019 and you were just getting settled in. But the pandemic followed soon after. So how are things settling now?
GR: How are things going for Investors Trust in the Middle East at the moment?
PS: It has been very, very good. We developed a platform to work exclusively online years ago, so the transition to fully remote business was seamless and continues to keep us prepared for future uncertainties. Over the last 15 years, we have worked to create a fully functional and highly secure platform for business management which really helped drive business as everyone has been locked down and stuck at home.
It has helped that we have just been able to carry on doing what we do. Working that way alongside online meetings, you can do everything that you need to with online writing of the business as well, it helps enormously.
GR: So in many respects ITA (in life offices years at least) has being set up as a relatively new company and having that tech side already in place has proven an advantage?
PS: It has. If you look at the different regions within the EMEA, the approach around covid has been very different. If you look at the Middle East and UAE, the approach that each of the countries has taken has been unique and different from one another. UAE is very internationally linked, whether it is for business or for tourism, it has been forward thinking, especially with the vaccine rollout. Being number one or number two in the world for the number of people vaccinated has helped the UAE to become even more of a hub than it was previously.
We know a number of advisers who have moved here as it is much easier to do business here. Particularly from Qatar, Lebanon etc. Lebanon has had other difficulties a well. But Oman and Bahrain have also struggled because they do not have the financial clout, of say, a Saudi and UAE for job retention, so it has been difficult for them.
It creates challenges for some and opportunities for others. The good thing about our model is that we work with advisers in many different locations and, by doing this, you average out the ups and the downs while also helping more advisers get through this period.
GR: How has the ‘traditional’ UAE adviser coped with the pandemic? Especially on top of the regulatory changes from last year (ie BOD-49) really kicking in?
PS: The big one was, of course, BOD-49. But, more recently, there have been new regulations from ESCA and the UAE Central Bank re disclosures and transparency. These regulatory changes are coming in UAE and obviously in other regions as well. We work with advisers in Europe, for example, who have had the challenge of Brexit. And the adviser businesses there that were previously passporting from the UK or vice versa, where those links have stopped.
Adapting to the pandemic
The team that started two years ago are all still there and we recently brought in a new addition to support the CIS brokers that we work with, so we continue to grow that area.
With ongoing fundamental regulatory changes preceded by an ongoing global pandemic, the advisory community in the Middle East has found itself (like many other regions across the world) in the eye of a perfect storm across the last 18 months or so.
Now, in the summer of 2021, as the pandemic begins to loosen its grip and the vaccination programmes begin kick in, International Investment’s Gary Robinson spoke to Philip Story (pictured above), head of distribution, EMEA at Investors Trust from his Dubai base, about how the advisers in the region have adapted to change and how Investors Trust has been well-placed to support them during this difficult time.
In this overview of the Middle East region, International Investment Editor Mark Battersby looks at how the region’s push to professionalism is now beginning to bear fruit and show how the regulatory gaps to other global financial hubs, such as the UK and US has been plugged by ongoing reforms.
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The Middle East is coming of age in regulatory terms as great swathes of new rules are driving the direction of travel towards a level of professionalism in the financial services industry across the region not seen before.
A client-centric rulebook with a one-year deadline set by the Securities and Commodities Authority (SCA) for the 36 registered financial consultancy firms to comply by is one of the latest moves, alongside a tough freeze on any applications in the pipeline.
The activation of these new rules comes against the backdrop of the merger announced last year between the Insurance Authority (IA) and Central Bank of the UAE, despite expectations in the market that that it would be the SCA combining with the IA. Advisers therefore still need two licences for fully holistic financial planning in the UAE because the IA licence only covers the protection products needed to sell to clients and the investment products are covered by the SCA.
The GCC Comes of Age
Over at the Dubai Financial Services Authority a new face has come on board with a different sort of background as chief executive, Christopher Calabia, who will be taking over from Bryan Stirewalt on 1 October.
A former executive at the Federal Reserve Bank of New York, he was most recently an executive with the Bill and Melinda Gates Foundation where he promoted regulations around inclusion of digital financial technology.
The chairman of the DFSA, Fadel Al Ali, said; “The DFSA plays a crucial role as the independent financial regulator of the DIFC. Chris’s experience, driving innovation in complex environments
while maintaining the stability and integrity of financial systems, will further strengthen the DIFC’s standing as a global financial hub.”
Evidence from those on the ground is that the pace of change is beginning to accelerate with the UAE clearly identifying itself as a top tier regulatory market.
One clear motivation for this was when the UAE’s economics minister said in a recent speech to the SCA that they had to get used to “waving goodbye to the last barrel of oil” which meant a clear change in direction for the economy.
The good news is that the UAE’s wealth management segment remained resilient and recorded growth in the face of the pandemic-induced economic slowdown, according to Boston Consulting Group’s latest report, ‘Global Wealth 2021: When Clients Take the Lead’.
Its financial wealth has grown by a compound annual growth rate of 3% from 2015 and about 70% of this financial wealth is investable wealth. Half of country’s wealth is owned by individuals whose net worth exceeds $5m.
Christopher Calalbia, DFSA
The GCC Comes of Age
The GCC Comes of Age
The Middle East is coming of age in regulatory terms as great swathes of new rules are driving the direction of travel towards a level of professionalism in the financial services industry across the region not seen before.
A client-centric rulebook with a one-year deadline set by the Securities and Commodities Authority (SCA) for the 36 registered financial consultancy firms to comply by is one of the latest moves, alongside a tough freeze on any applications in the pipeline.
The activation of these new rules comes against the backdrop of the merger announced last year between the Insurance Authority (IA) and Central Bank of the UAE, despite expectations in the market that that it would be the SCA combining with the IA. Advisers therefore still need two licences for fully holistic financial planning in the UAE because the IA licence only covers the protection products needed to sell to clients and the investment products are covered by the SCA.
Over at the Dubai Financial Services Authority a new face has come on board with a different sort of background as chief executive, Christopher Calabia, who will be taking over from Bryan Stirewalt on 1 October.
A former executive at the Federal Reserve Bank of New York, he was most recently an executive with the Bill and Melinda Gates Foundation where he promoted regulations around inclusion of digital financial technology.
The chairman of the DFSA, Fadel Al Ali, said; “The DFSA plays a crucial role as the independent financial regulator of the DIFC. Chris’s experience, driving innovation in complex environments while maintaining the stability and integrity of financial systems, will further strengthen the DIFC’s standing as a global financial hub.”
Evidence from those on the ground is that the pace of change is beginning to accelerate with the UAE clearly identifying itself as a top tier regulatory market.
One clear motivation for this was when the UAE’s economics minister said in a recent speech to the SCA that they had to get used to “waving goodbye to the last barrel of oil” which meant a clear change in direction for the economy.
The good news is that the UAE’s wealth management segment remained resilient and recorded growth in the face of the pandemic-induced economic slowdown, according to Boston Consulting Group’s latest report, ‘Global Wealth 2021: When Clients Take the Lead’.
Its financial wealth has grown by a compound annual growth rate of 3% from 2015 and about 70% of this financial wealth is investable wealth. Half of country’s wealth is owned by individuals whose net worth exceeds $5m.
The UAE, which represented 26% of the GCC’s financial wealth in 2020, is expected to witness strong growth of 4% CAGR to reach $700bn by 2025, a $100bn increase from 2020.
Mustafa Bosca, managing director and partner at BCG said in the report: “The UAE’s individual financial wealth reached $600bn in 2020 despite the pandemic impacting the local economy. Although the pandemic posed many challenges, the UAE’s wealth segment has proven to be resilient in the face of adversity, hence the growth it has recorded.”
The GCC’s financial wealth is forecast to reach $2.7trn in 2025 from $2.2trn in 2020.
Saudi Arabia and the UAE had approaching three-quarters (71%) of the financial wealth within the GCC, with Saudi accounting for 45%, the UAE at 26% and 11% each by Qatar and Kuwait.
These statistics do illustrate how the UAE is now competing commercially with Saudi in a way that it never used to, in the days when Saudi took two thirds of the entire Gulf’s GDP.
As for how the UAE’s financial advisers and wealth managers are faring right now and into the future have a read of the adviser views in this ezine, and reflect on some of the insights by consultancy Insight Discovery which this year surveyed 42 advisers in the Middle East, 26 advisory firm chief executives and 16 bank executives, for its 11th annual Middle East Investment Panorama.
It found that 74% of advisers see a prolonged global recession as the main challenge for their business over the next 12 months.
This was followed by an expat exodus from the GCC (66%), regulatory landscape (51%), market volatility (37%) and competition from firms which are not regulated (34%).
On the other side of the coin, 80% of advisers saw new technology and data analysis tools as the main opportunity for their business over the next year.
In second place was expanding their business/attracting new customers (71%), with clients’ willingness to invest (63%) in third.
Other opportunities included optimising their business/outsourcing investments (46%) and retaining existing clients (43%).
The Insurance Authority’s BOD49 rules which capped commissions has deeply impacted both providers, which have had to design new products, and advisers in terms of how they navigate the changes in remuneration.
The Insight Discovery research revealed here that 61% of advisers’ total revenue was made up of recurring fees and commissions, while 39% comprised initial fees and commissions.
The survey also asked how advisers measure effectiveness in their job and 38% said annual commission, followed by number of referrals per year (24%), amount of renewal commission (19%), percentage annual change in transaction volume (10%) and awards and peer recognition (10%).
This suggests there is still plenty of work to do to shift advisers across to a more sustainable remuneration model which builds long term value into the business through repeat income flows.
Insight Discovery highlighted six main areas which can be opportunities for the Middle East advice market in the next 12 months:
• Assets under management gathering from poorly managed advisory firms.
• Continued growth on a similar trajectory based upon a differentiated proposition.
• Market consolidation of IFAs.
• New regulations opening up a new set of customers.
• Promoting being an ethical business.
• Retaining existing client relationships.
As for the challenges, the consultancy pointed to such concerns as cashflow problems from distressed clients, technology-based advisory models at a fraction of the cost and end-of-service benefits.
Pulling back to the wider landscape, the economy of Abu Dhabi is earning good money from the high oil price and Dubai is receiving money through VAT payments it never had before.
And unconnected to the economy is a current pent-up exodus of expats after Covid-related travel restrictions over the past two years and possibly the hottest summer ever with record highs recorded of 51.8 degrees celsius.
The UAE’s individual financial wealth reached $600bn in 2020 despite the pandemic impacting the local economy. Although the pandemic posed many challenges, the UAE’s wealth segment has proven to be resilient in the face of adversity, hence the growth it has recorded
“
”
A former executive at the Federal Reserve Bank of New York, he was most recently an executive with the Bill and Melinda Gates Foundation where he promoted regulations around inclusion of digital financial technology.
The chairman of the DFSA, Fadel Al Ali, said; “The DFSA plays a crucial role as the independent financial regulator of the DIFC. Chris’s experience, driving innovation in complex environments while maintaining the stability and integrity of financial systems, will further strengthen the DIFC’s standing as a global financial hub.”
Evidence from those on the ground is that the pace of change is beginning to accelerate with the UAE clearly identifying itself as a top tier regulatory market.
One clear motivation for this was when the UAE’s economics minister said in a recent speech to the SCA that they had to get used to “waving goodbye to the last barrel of oil” which meant a clear change in direction for the economy.
The good news is that the UAE’s wealth management segment remained resilient and recorded growth in the face of the pandemic-induced economic slowdown, according to Boston Consulting Group’s latest report, ‘Global Wealth 2021: When Clients Take the Lead’.
Its financial wealth has grown by a compound annual growth rate of 3% from 2015 and about 70% of this financial wealth is investable wealth. Half of country’s wealth is owned by individuals whose net worth exceeds $5m.
The UAE, which represented 26% of the GCC’s financial wealth in 2020, is expected to witness strong growth of 4% CAGR to reach $700bn by 2025, a $100bn increase from 2020.
Mustafa Bosca, managing director and partner at BCG said in the report: “The UAE’s individual financial wealth reached $600bn in 2020 despite the pandemic impacting the local economy. Although the pandemic posed many challenges, the UAE’s wealth segment has proven to be resilient in the face of adversity, hence the growth it has recorded.”
The GCC’s financial wealth is forecast to reach $2.7trn in 2025 from $2.2trn in 2020.
Saudi Arabia and the UAE had approaching three-quarters (71%) of the financial wealth within the GCC, with Saudi accounting for 45%, the UAE at 26% and 11% each by Qatar and Kuwait.
These statistics do illustrate how the UAE is now competing commercially with Saudi in a way that it never used to, in the days when Saudi took two thirds of the entire Gulf’s GDP.
As for how the UAE’s financial advisers and wealth managers are faring right now and into the future have a read of the adviser views in this ezine, and reflect on some of the insights by consultancy Insight Discovery which this year surveyed 42 advisers in the Middle East, 26 advisory firm chief executives and 16 bank executives, for its 11th annual Middle East Investment Panorama.
It found that 74% of advisers see a prolonged global recession as the main challenge for their business over the next 12 months.
This was followed by an expat exodus from the GCC (66%), regulatory landscape (51%), market volatility (37%) and competition from firms which are not regulated (34%).
On the other side of the coin, 80% of advisers saw new technology and data analysis tools as the main opportunity for their business over the next year.
In second place was expanding their business/attracting new customers (71%), with clients’ willingness to invest (63%) in third.
Other opportunities included optimising their business/outsourcing investments (46%) and retaining existing clients (43%).
The Insurance Authority’s BOD49 rules which capped commissions has deeply impacted both providers, which have had to design new products, and advisers in terms of how they navigate the changes in remuneration.
The Insight Discovery research revealed here that 61% of advisers’ total revenue was made up of recurring fees and commissions, while 39% comprised initial fees and commissions.
The survey also asked how advisers measure effectiveness in their job and 38% said annual commission, followed by number of referrals per year (24%), amount of renewal commission (19%), percentage annual change in transaction volume (10%) and awards and peer recognition (10%).
This suggests there is still plenty of work to do to shift advisers across to a more sustainable remuneration model which builds long term value into the business through repeat income flows.
Insight Discovery highlighted six main areas which can be opportunities for the Middle East advice market in the next 12 months:
• Assets under management gathering from poorly managed advisory firms.
• Continued growth on a similar trajectory based upon a differentiated proposition.
• Market consolidation of IFAs.
• New regulations opening up a new set of customers.
• Promoting being an ethical business.
• Retaining existing client relationships.
As for the challenges, the consultancy pointed to such concerns as cashflow problems from distressed clients, technology-based advisory models at a fraction of the cost and end-of-service benefits.
Pulling back to the wider landscape, the economy of Abu Dhabi is earning good money from the high oil price and Dubai is receiving money through VAT payments it never had before.
And unconnected to the economy is a current pent-up exodus of expats after Covid-related travel restrictions over the past two years and possibly the hottest summer ever with record highs recorded of 51.8 degrees celsius.
– Mustafa Bosca, partner, BCG
The Middle East is coming of age in regulatory terms as great swathes of new rules are driving the direction of travel towards a level of professionalism in the financial services industry across the region not seen before.
A client-centric rulebook with a one-year deadline set by the Securities and Commodities Authority (SCA) for the 36 registered financial consultancy firms to comply by is one of the latest moves, alongside a tough freeze on any applications in the pipeline.
The activation of these new rules comes against the backdrop of the merger announced last year between the Insurance Authority (IA) and Central Bank of the UAE, despite expectations in the market that that it would be the SCA combining with the IA. Advisers therefore still need two licences for fully holistic financial planning in the UAE because the IA licence only covers the protection products needed to sell to clients and the investment products are covered by the SCA.
Over at the Dubai Financial Services Authority a new face has come on board with a different sort of background as chief executive, Christopher Calabia, who will be taking over from Bryan Stirewalt on 1 October.
A former executive at the Federal Reserve Bank of New York, he was most recently an executive with the Bill and Melinda Gates Foundation where he promoted regulations around inclusion of digital financial technology.
The chairman of the DFSA, Fadel Al Ali, said; “The DFSA plays a crucial role as the independent financial regulator of the DIFC. Chris’s experience, driving innovation in complex environments while maintaining the stability and integrity of financial systems, will further strengthen the DIFC’s standing as a global financial hub.”
Evidence from those on the ground is that the pace of change is beginning to accelerate with the UAE clearly identifying itself as a top tier regulatory market.
One clear motivation for this was when the UAE’s economics minister said in a recent speech to the SCA that they had to get used to “waving goodbye to the last barrel of oil” which meant a clear change in direction for the economy.
The good news is that the UAE’s wealth management segment remained resilient and recorded growth in the face of the pandemic-induced economic slowdown, according to Boston Consulting Group’s latest report, ‘Global Wealth 2021: When Clients Take the Lead’.
Its financial wealth has grown by a compound annual growth rate of 3% from 2015 and about 70% of this financial wealth is investable wealth. Half of country’s wealth is owned by individuals whose net worth exceeds $5m.
The UAE, which represented 26% of the GCC’s financial wealth in 2020, is expected to witness strong growth of 4% CAGR to reach $700bn by 2025, a $100bn increase from 2020.
Mustafa Bosca, managing director and partner at BCG said in the report: “The UAE’s individual financial wealth reached $600bn in 2020 despite the pandemic impacting the local economy. Although the pandemic posed many challenges, the UAE’s wealth segment has proven to be resilient in the face of adversity, hence the growth it has recorded.”
The GCC’s financial wealth is forecast to reach $2.7trn in 2025 from $2.2trn in 2020.
Saudi Arabia and the UAE had approaching three-quarters (71%) of the financial wealth within the GCC, with Saudi accounting for 45%, the UAE at 26% and 11% each by Qatar and Kuwait.
These statistics do illustrate how the UAE is now competing commercially with Saudi in a way that it never used to, in the days when Saudi took two thirds of the entire Gulf’s GDP.
As for how the UAE’s financial advisers and wealth managers are faring right now and into the future have a read of the adviser views in this ezine, and reflect on some of the insights by consultancy Insight Discovery which this year surveyed 42 advisers in the Middle East, 26 advisory firm chief executives and 16 bank executives, for its 11th annual Middle East Investment Panorama.
It found that 74% of advisers see a prolonged global recession as the main challenge for their business over the next 12 months.
This was followed by an expat exodus from the GCC (66%), regulatory landscape (51%), market volatility (37%) and competition from firms which are not regulated (34%).
On the other side of the coin, 80% of advisers saw new technology and data analysis tools as the main opportunity for their business over the next year.
In second place was expanding their business/attracting new customers (71%), with clients’ willingness to invest (63%) in third.
Other opportunities included optimising their business/outsourcing investments (46%) and retaining existing clients (43%).
The Insurance Authority’s BOD49 rules which capped commissions has deeply impacted both providers, which have had to design new products, and advisers in terms of how they navigate the changes in remuneration.
The Insight Discovery research revealed here that 61% of advisers’ total revenue was made up of recurring fees and commissions, while 39% comprised initial fees and commissions.
The survey also asked how advisers measure effectiveness in their job and 38% said annual commission, followed by number of referrals per year (24%), amount of renewal commission (19%), percentage annual change in transaction volume (10%) and awards and peer recognition (10%).
This suggests there is still plenty of work to do to shift advisers across to a more sustainable remuneration model which builds long term value into the business through repeat income flows.
Insight Discovery highlighted six main areas that can be opportunities for the Middle East advice market in the next 12 months:
• Assets under management gathering from poorly managed advisory firms.
• Continued growth on a similar trajectory based upon a differentiated proposition.
• Market consolidation of IFAs.
• New regulations opening up a new set of customers.
• Promoting being an ethical business.
• Retaining existing client relationships.
As for the challenges, the consultancy pointed to such concerns as cashflow problems from distressed clients, technology-based advisory models at a fraction of the cost and end-of-service benefits.
Pulling back to the wider landscape, the economy of Abu Dhabi is earning good money from the high oil price and Dubai is receiving money through VAT payments it never had before.
And unconnected to the economy is a current pent-up exodus of expats after Covid-related travel restrictions over the past two years and possibly the hottest summer ever with record highs recorded of 51.8 degrees celsius.
The UAE, which represented 26% of the GCC’s financial wealth in 2020, is expected to witness strong growth of 4% CAGR to reach $700bn by 2025, a $100bn increase from 2020.
Mustafa Bosca, managing director and partner at BCG said in the report: “The UAE’s individual financial wealth reached $600bn in 2020 despite the pandemic impacting the local economy. Although the pandemic posed many challenges, the UAE’s wealth segment has proven to be resilient in the face of adversity, hence the growth it has recorded.”
The GCC’s financial wealth is forecast to reach $2.7trn in 2025 from $2.2trn in 2020.
Saudi Arabia and the UAE had approaching three-quarters (71%) of the financial wealth within the GCC, with Saudi accounting for 45%, the UAE at 26% and 11% each by Qatar and Kuwait.
These statistics do illustrate how the UAE is now competing commercially with Saudi in a way that it never used to, in the days when Saudi took two thirds of the entire Gulf’s GDP.
As for how the UAE’s financial advisers and wealth managers are faring right now and into the future have a read of the adviser views in this ezine, and reflect on some of the insights by consultancy Insight Discovery which this year surveyed 42 advisers in the Middle East, 26 advisory firm chief executives and 16 bank executives, for its 11th annual Middle East Investment Panorama.
It found that 74% of advisers see a prolonged global recession as the main challenge for their business over the next 12 months.
This was followed by an expat exodus from the GCC (66%), regulatory landscape (51%), market volatility (37%) and competition from firms which are not regulated (34%).
On the other side of the coin, 80% of advisers saw new technology and data analysis tools as the main opportunity for their business over the next year.
In second place was expanding their business/attracting new customers (71%), with clients’ willingness to invest (63%) in third.
Other opportunities included optimising their business/outsourcing investments (46%) and retaining existing clients (43%).
The Insurance Authority’s BOD49 rules which capped commissions has deeply impacted both providers, which have had to design new products, and advisers in terms of how they navigate the changes in remuneration.
The Insight Discovery research revealed here that 61% of advisers’ total revenue was made up of recurring fees and commissions, while 39% comprised initial fees and commissions.
The survey also asked how advisers measure effectiveness in their job and 38% said annual commission, followed by number of referrals per year (24%), amount of renewal commission (19%), percentage annual change in transaction volume (10%) and awards and peer recognition (10%).
This suggests there is still plenty of work to do to shift advisers across to a more sustainable remuneration model which builds long term value into the business through repeat income flows.
Insight Discovery highlighted six main areas that can be opportunities for the Middle East advice market in the next 12 months:
• Assets under management gathering from poorly managed advisory firms.
• Continued growth on a similar trajectory based upon a differentiated proposition.
• Market consolidation of IFAs.
• New regulations opening up a new set of customers.
• Promoting being an ethical business.
• Retaining existing client relationships.
As for the challenges, the consultancy pointed to such concerns as cashflow problems from distressed clients, technology-based advisory models at a fraction of the cost and end-of-service benefits.
Pulling back to the wider landscape, the economy of Abu Dhabi is earning good money from the high oil price and Dubai is receiving money through VAT payments it never had before.
And unconnected to the economy is a current pent-up exodus of expats after Covid-related travel restrictions over the past two years and possibly the hottest summer ever with record highs recorded of 51.8 degrees celsius.
The UAE, which represented 26% of the GCC’s financial wealth in 2020, is expected to witness strong growth of 4% CAGR to reach $700bn by 2025, a $100bn increase from 2020.
Mustafa Bosca, managing director and partner at BCG said in the report: “The UAE’s individual financial wealth reached $600bn in 2020 despite the pandemic impacting the local economy. Although the pandemic posed many challenges, the UAE’s wealth segment has proven to be resilient in the face of adversity, hence the growth it has recorded.”
The GCC’s financial wealth is forecast to reach $2.7trn in 2025 from $2.2trn in 2020.
Saudi Arabia and the UAE had approaching three-quarters (71%)
of the financial wealth within the GCC, with Saudi accounting for 45%, the UAE at 26% and 11% each by Qatar and Kuwait.
These statistics do illustrate how the UAE is now competing commercially with Saudi in a way that it never used to, in the days when Saudi took two-thirds of the entire Gulf’s GDP.
As for how the UAE’s financial advisers and wealth managers are faring right now and into the future have a read of the adviser views in this ezine, and reflect on some of the insights by consultancy Insight Discovery which this year surveyed 42 advisers in the Middle East, 26 advisory firm chief executives and 16 bank executives, for its 11th annual Middle East Investment Panorama.
It found that 74% of advisers see a prolonged global recession as the main challenge for their business over the next 12 months. This was followed by an expat exodus from the GCC (66%), regulatory landscape (51%), market volatility (37%) and competition from firms which are not regulated (34%). On the other side of the coin, 80% of advisers saw new technology and data analysis tools as the main opportunity for their business over the next year.
In second place was expanding their business/attracting new customers (71%), with clients’ willingness to invest (63%) in third.
Other opportunities included optimising their business/outsourcing investments (46%) and retaining existing clients (43%).
The Insurance Authority’s BOD49 rules which capped commissions has deeply impacted both providers, which have had to design new products, and advisers in terms of how they navigate the changes in remuneration.
The Insight Discovery research revealed here that 61% of advisers’ total revenue was made up of recurring fees and commissions, while 39% comprised initial fees and commissions.
The survey also asked how advisers measure effectiveness in their job and 38% said annual commission, followed by number of referrals per year (24%), amount of renewal commission (19%), percentage annual change in transaction volume (10%) and awards and peer recognition (10%).
This suggests there is still plenty of work to do to shift advisers across to a more sustainable remuneration model which builds long term value into the business through repeat income flows.
Insight Discovery highlighted six main areas that can be opportunities for the Middle East advice market in the next 12 months:
• Assets under management gathering from poorly managed advisory firms.
• Continued growth on a similar trajectory based upon a differentiated proposition.
• Market consolidation of IFAs.
• New regulations opening up a new set of customers.
• Promoting being an ethical business.
• Retaining existing client relationships.
As for the challenges, the consultancy pointed to such concerns as cashflow problems from distressed clients, technology-based advisory models at a fraction of the cost and end-of-service benefits.
Pulling back to the wider landscape, the economy of Abu Dhabi is earning good money from the high oil price and Dubai is receiving money through VAT payments it never had before.
And unconnected to the economy is a current pent-up exodus of expats after Covid-related travel restrictions over the past two years and possibly the hottest summer ever with record highs recorded of 51.8 degrees celsius.
The Middle East is coming of age in regulatory terms as great swathes of new rules are driving the direction of travel towards a level of professionalism in the financial services industry across the region not seen before.
A client-centric rulebook with a one-year deadline set by the Securities and Commodities Authority (SCA) for the 36 registered financial consultancy firms to comply by is one of the latest moves, alongside a tough freeze on any applications in the pipeline.
The activation of these new rules comes against the backdrop of the merger announced last year between the Insurance Authority (IA) and Central Bank of the UAE, despite expectations in the market that that it would be the SCA combining with the IA. Advisers therefore still need two licences for fully holistic financial planning in the UAE because the IA licence only covers the protection products needed to sell to clients and the investment products are covered by the SCA.
Over at the Dubai Financial Services Authority a new face has come on board with a different sort of background as chief executive, Christopher Calabia, who will be taking over from Bryan Stirewalt on 1 October.
A former executive at the Federal Reserve Bank of New York, he was most recently an executive with the Bill and Melinda Gates Foundation where he promoted regulations around inclusion of digital financial technology.
The chairman of the DFSA, Fadel Al Ali, said; “The DFSA plays a crucial role as the independent financial regulator of the DIFC. Chris’s experience, driving innovation in complex environments while maintaining the stability and integrity of financial systems, will further strengthen the DIFC’s standing as a global financial hub.”
Evidence from those on the ground is that the pace of change is beginning to accelerate with the UAE clearly identifying itself as a top tier regulatory market.
One clear motivation for this was when the UAE’s economics minister said in a recent speech to the SCA that they had to get used to “waving goodbye to the last barrel of oil” which meant a clear change in direction for the economy.
The good news is that the UAE’s wealth management segment remained resilient and recorded growth in the face of the pandemic-induced economic slowdown, according to Boston Consulting Group’s latest report, ‘Global Wealth 2021: When Clients Take the Lead’.
Its financial wealth has grown by a compound annual growth rate of 3% from 2015 and about 70% of this financial wealth is investable wealth. Half of country’s wealth is owned by individuals whose net worth exceeds $5m.
Over at the Dubai Financial Services Authority a new face has come on board with a different sort of background as chief executive, Christopher Calabia, who will be taking over from Bryan Stirewalt on 1 October.
A former executive at the Federal Reserve Bank of New York, he was most recently an executive with the Bill and Melinda Gates Foundation where he promoted regulations around inclusion of digital financial technology.
The chairman of the DFSA, Fadel Al Ali, said; “The DFSA plays a crucial role as the independent financial regulator of the DIFC. Chris’s experience, driving innovation in complex environments while maintaining the stability and integrity of financial systems, will further strengthen the DIFC’s standing as a global financial hub.”
Evidence from those on the ground is that the pace of change is beginning to accelerate with the UAE clearly identifying itself as a top tier regulatory market.
One clear motivation for this was when the UAE’s economics minister said in a recent speech to the SCA that they had to get used to “waving goodbye to the last barrel of oil” which meant a clear change in direction for the economy.
The good news is that the UAE’s wealth management segment remained resilient and recorded growth in the face of the pandemic-induced economic slowdown, according to Boston Consulting Group’s latest report, ‘Global Wealth 2021: When Clients Take the Lead’.
Its financial wealth has grown by a compound annual growth rate of 3% from 2015 and about 70% of this financial wealth is investable wealth. Half of country’s wealth is owned by individuals whose net worth exceeds $5m.
Sean Kelleher, chief executive, Mondial (Dubai)
Sean Kelleher, chief executive, Mondial (Dubai)
How has regulatory change affected your business and advice in the region generally?
We are witnessing a veritable Tsunami of change for bodies who handle client monies. On top of Economic Substance and TFS (Targeted Financial Sanctions) we have now been through an extensive Securities and Commodities Association (SCA) inspection and lumbered with a new Rule Book which contains reference to what SCA’s new Regulations Manual will look like. Yep, on the horizon we have BOD-49 for the Insurance Authority guys and our fellow “planners” from that sphere also seem occupied with reform.
Q&A
Are we complaining? Not really. The changes must be good for clients, ultimately the professionals, and certainly the countries reputation. However, those stuck in the “old ways” where paperwork was a chore will continue to roll their eyes as management burden them with enforced behaviour.
We are still buried in dealing with the above so ask us in six months. In the meantime, those from previously regulated regimes will give us knowing looks.
The big change for Luddites like myself is the discovery of stuff like Zoom and Teams. This is having a heavy domino effect
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How has the pandemic impacted on how you conduct your business and advice in the region generally?
The big change for Luddites like myself is the discovery of stuff like Zoom and Teams. This is having a heavy domino effect. Social Media as a means of client acquisition and the ability to deal more easily with cross jurisdiction matters for example. This may have happened anyway, but evolution has become revolution.
What are the key investment and advice trends that you have seen emerge this year and that you expect to continue into 2022 (ie ESG, Crypto, Multi Asset etc)? Is life assurance industry in the region near finished due to lower margins etc?
ESG is going from trend to mainstay. Or else, the End of The World is Nigh. Crypto is too Avant Garde for our current thinking whilst we bed down Zoom. Multi Asset has been with us since the Flintstones, and whatever happens to Life Insurance margins, the public still need it. All a lower margin does is increase the need for volume.
Have issues such as limited movement in expat world in the region affected business flows? How are things looking re growth, staff retention and expansion and general profitability for your business in Dubai and the rest of the region?
The pandemic was certainly a negative for our business. People dislike uncertainty and that creates a poor atmosphere for new business and early withdrawals. But that was then. We are now adapting to a new world. Staff retention is clearly a matter of the quality of retention.
Our view of the future, given the certainty of change with regulators, and economic changes as the UAE waves goodbye to its last barrels of oil, is quite rosy. We have had to cut, chop, prune, and we now expect to grow.
Tim Searle, chairman, Globaleye
Tim Searle, chairman, Globaleye
How has regulatory change affected your business and advice in the region generally?
Regulatory change has and will continue to affect our business in many ways, but that is not necessarily bad. We have been aware of the changing landscape for a while and have taken steps to position the business accordingly. That said, the inevitable consequence of BOD49 has been the significant reduction in pure life assurance sales, which negatively affects this market more than it does us. The penetration of insurance in the UAE, compared to other markets, was extremely low, and this aspect of financial planning has and will most likely continue to be adviser-led.
It was expected in 2020, regulators IA and SCA would merge, however, this didn’t happen, with the IA merging with the UAECB. We were prepared for any eventuality, so as a result of this news Globaleye acquired an SCA-licensed firm to join the very small club of dual-licensed advisories in the country. Operating two licenses comes with double the overheads, as both must function as two very separate businesses.
With the recent announcement of DFSA licensed firms being able to promote services outside of DIFC, it is clear that the regulatory landscape will continue changing, and we must be agile enough to adapt to it quickly.
Most of all, regulation has accelerated the change in our business model. Our focus has shifted to serving the HNWI segment, as the retail market is no longer commercially viable, with lower profit margins and additional compliance burden.
How has the pandemic impacted on how you conduct your business and advice in the region generally?
The pandemic has helped our business grow in terms of revenue generation and help us understand the efficiencies of technology. In addition, the pandemic has brought home the importance of having sufficient insurance coverage, which is keeping us very busy helping and advising clients.
From a technology perspective, we have since used it to leverage a cross-border offering in the region. For us, deploying the right
What are the key investment and advice trends that you have seen emerge this year and that you expect to continue into 2022 (ie ESG, Crypto, Multi Asset etc)? Is life assurance industry in the region near finished due to lower margins etc?
As mentioned above, the retail life assurance market is facing some challenges in the future. We believe that D2C platforms by insurance companies and new InsureTech firms will prevail to capture this business.
ESG is an already prevalent trend that we believe is here to stay. We generally avoid the crypto hype, as there is too much risk involved. However, we are taking the time to develop our advisers on the broader subject of DeFi, to ensure we are prepared for the next frontier of finance and serve the new generations of wealth. NFTs have been topical as of late, and we are currently working on the tokenisation of a significant real estate asset in the UAE. We hope to be able to announce our work on this soon.
We are actively following the rise of venture capital and private equity investments in the region closely. Companies in the Middle East are attracting record amounts of funding, and soon we may see the UAE’s first unicorn, Swvl, when it lists on the Nasdaq. In addition, clients in the region are waking up to private market investments. Naturally, they want access to these opportunities, which has historically only been available to a fortunate few.
Have issues such as limited movement in expat world in the region affected business flows? How are things looking re growth, staff retention and expansion and general profitability for your business in Dubai and the rest of the region?
In the first few months of the pandemic, there was initially a negative impact on business flows. However, after the world and our business adapted to the new norm, we saw business flows increase exponentially. We are investing heavily in recruiting top talent and scouting for further acquisition opportunities in the UAE and Asia. While profitability in the retail market is declining, this will increase over time with new technology and economies of scale. Our profitability continues to grow in the HNW segment, as does the complexity of client circumstances. In this space, there is a lot more value add services that we can and do offer.
Deploying the right technology now needs to be at the centre of our proposition. We intend to start thinking more like a technology firm than a wealth manager
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technology now needs to be at the centre of our proposition. We intend to start thinking more like a technology firm than a wealth manager.
Sam Instone, director, AES International
Sam Instone, director, AES International
How has regulatory change affected your business and advice in the region generally?
Regulatory change and development has been extremely positive in the UAE. The DFSA has created a world leading International Financial Centre and the merger of the Insurance Authority with the Central Bank has led to very positive consumer outcomes within the Federal region.
How has the pandemic impacted on how you conduct your business and advice in the region generally?
We've experienced record levels of growth since the outset of the
pandemic. I imagine this is because consumers are relying more upon online research and becoming increasingly aware of the difference between varying types of advice.
What are the key investment and advice trends that you have seen emerge this year and that you expect to continue into 2022 (ie ESG, Crypto, Multi Asset etc)? Is life assurance industry in the region near finished due to lower margins etc?
Increased consumer awareness is leading to a surge in demand for index funds, and just like in other parts of the world this area is booming.
We’re extremely optimistic regarding growth, expansion and profitability both locally and regionally
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Have issues such as limited movement in expat world in the region affected business flows? How are things looking re growth, staff retention and expansion and general profitability for your business in Dubai and the rest of the region?
We’re extremely optimistic regarding growth, expansion and
profitability both locally and regionally. The unparalleled opportunity for such growth is in our view likely to attract professional advisers from other geographic regions given the many benefits of living and working in Dubai.
Con Lillis, CEO, Abacus Financial Consultants
Con Lillis, CEO, Abacus Financial Consultants
How has regulatory change affected your business and advice in the region generally?
Regulations have changed many things in our region, not least the span of areas we can advise upon. Whereas in the past the lines between topics were blurred they are now more clearly defined. You are either an insurance adviser or an investment adviser and the normal holistic approach has been forced to adapt to focus on one or the other. Some companies form alliances or have interests in other licenced entities to broaden the offering of services to their clients but clear lines must be drawn between each service offered.
How has the pandemic impacted on how you conduct your business and advice in the region generally?
Clearly the reaction to the pandemic has had a massive effect on how we now work. We can no longer travel freely internationally and often clients elect not to meet face to face. With the rules constantly changing we need to be nimble in the manner in which we operate and be ready to swiftly adapt when advised to by the government.
Have issues such as limited movement in expat world in the region affected business flows? How are things looking re growth, staff retention and expansion and general profitability for your business in Dubai and the rest of the region?
Profitability is sound for us with increased levels of recurring income to the business although initial fees are lower this year than last. There is a tendency towards value and cost reduction as clients seek best returns. Expansion is slow as the market stalls and adapts to the new rules and regulations around Covid. With rumours of increasing capital adequacy requirements there is an air of caution among business owners.
With the rules constantly changing we need to be nimble in the manner in which we operate and be ready to swiftly adapt when advised to by the government
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What are the key investment and advice trends that you have seen emerge this year and that you expect to continue into 2022 (ie ESG, Crypto, Multi Asset etc)? Is life assurance industry in the region near finished due to lower margins etc?
Increased consumer awareness is leading to a surge in demand for index funds, and just like in other parts of the world this area is booming.
Nigel Green, CEO and Founder, deVere Group
Nigel Green, CEO and Founder, deVere Group
How has regulatory change affected your business and advice in the region generally?
I believe that, ultimately, these changes will help shore-up the international advice sector, making it more robust and, therefore, will be good for its long-term future.
Although we’re a large and well-resourced organisation, we’re also agile and proactive, meaning that we’ve been able to adapt to evolving regulatory requirements and client expectations.
I expect that the regulatory approach being taken by the UAE will
further galvanise its future as a leading international financial hub. The UAE is already poised in this regard thanks to a high proposition of high-net-worth individuals, a dynamic business community, world-class infrastructure, superior communications networks, English as its de-facto business language, and its enviable geographical location and time zone, among other factors.
How has the pandemic impacted on how you conduct your business and advice in the region generally?
DeVere adapted rapidly and decisively when the pandemic hit. We began to work with clients and colleagues around the world via Zoom meetings – and still today a lot of our work is done by video conferencing.
The way we save, invest, use and manage our money has changed forever. We are witnessing a personal finance revolution driven by tech.
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We’ve found that many of our GCC clients are more willing than ever to have meetings via Zoom. In fact, they seem to prefer it to face-to-face meetings in many cases. The result of this is that we can speak to more clients each day, helping them reach their financial objectives, and our productivity has increased considerably.
Zoom and other technologies have helped us immensely and now, wherever possible, we offer a hybrid system where
We’ve found that many of our GCC clients are more willing than ever to have meetings via Zoom. In fact, they seem to prefer it to face-to-face meetings in many cases. The result of this is that we can speak to more clients each day, helping them reach their financial objectives, and our productivity has increased considerably.
Zoom and other technologies have helped us immensely and now, wherever possible, we offer a hybrid system where people can either work from our Covid-secure, cutting-edge offices, from home, or a combination of the two. We’ve also registered a considerable jump in usage of our fintech apps from existing clients, and a sharp increase in enquiries from potential ones, which underscores that people are becoming more tech-savvy than ever. Like never before, people are embracing the convenience of immediate, low-cost access to, use and management of their money. As the world moves towards an ever-more digitalised and globalised future – which is increasingly influenced by those who’ve grown-up with 'on-the go' tech - this phenomenon can only be expected to gain momentum.
The way we save, invest, use and manage our money has changed forever. We are witnessing a personal finance revolution driven by tech.
What are the key investment and advice trends that you have seen emerge this year and that you expect to continue into 2022 (ie ESG, Crypto, Multi Asset etc)?
There are three underlying forces that have been the major investment megatrends of this year and will, in my opinion, be so for the rest of this decade, likely to be worth tens of trillions of dollars.
The first is technology. The digital revolution is taking place right now in a monumental way, with our daily lives become ever more digitalised at a staggering speed. The rapid advancement of digital technologies is already fundamentally changing business models, money (cryptocurrencies), institutions and society as a whole - and this trend is likely to pick up pace further as tech evolves and mass adoption picks up further.
The second megatrend will be environmental, social and governance (ESG) investments. The pandemic has fostered a growing collective awareness and sense of mutual responsibility.
It’s been brought into sharp focus that today’s public health crisis could be overshadowed by tomorrow’s climate crisis. It has demonstrated the importance of having sustainable and diverse supply chains. It has also underscored that companies with strong corporate governance and good business practice are best-positioned for the future. This has been evidenced by those investments with robust ESG credentials continuing to outperform throughout the bouts of stock market volatility.
The third will be the rollout out of 5G, which will create a global ‘work anywhere’ culture and this can be expected to make a significant impact on international financial services.
Is the life assurance industry in the region near finished due to lower margins etc?
Life assurance is part of any sound financial planning strategy and will always be in demand, especially among high-net-worth individuals and/or professionals. And where there is demand, there will be providers ready to meet it. I’m confident the industry in this region is able not only to adapt, but to thrive and grow.
Have issues such as limited movement in the expat world in the region affected business flows? How are things looking re growth, staff retention and expansion and general profitability for your business in Dubai and the rest of the region?
Thanks to the tremendous effort, talent and commitment of our people around the world, we’ve not only maintained, but increased business inflows.
Also, of course, despite movement restrictions, expats will always need specialist cross-border financial advice. In fact, our clients are becoming ever more engaged as the pandemic has brought home the need for financial security for themselves and their loved ones like never before.
We’re continually looking to not only grow our group of companies but look to develop new ones that are tech-driven, future-first entities in order to meet the evolving nature of business and personal finance.
Intro copy
How has the pandemic impacted on how you conduct your business and advice in the region generally?
The big change for Luddites like myself is the discovery of stuff like Zoom and Teams. This is having a heavy domino effect. Social Media as a means of client acquisition and the ability to deal more easily with cross jurisdiction matters for example. This may have happened anyway, but evolution has become revolution.
How has regulatory change affected your business and advice in the region generally?
We are witnessing a veritable Tsunami of change for bodies who handle client monies. On top of Economic Substance and TFS (Targeted Financial Sanctions) we have now been through an extensive Securities and Commodities Association (SCA) inspection and lumbered with a new Rule Book which contains reference to what SCA’s new Regulations Manual will look like. Yep, on the horizon we have BOD-49 for the Insurance Authority guys and our fellow “planners” from that sphere also seem occupied with reform.
How has regulatory change affected your business and advice in the region generally?
We are witnessing a veritable Tsunami of change for bodies who handle client monies. On top of Economic Substance and TFS (Targeted Financial Sanctions) we have now been through an extensive Securities and Commodities Association (SCA) inspection and lumbered with a new Rule Book which contains reference to what SCA’s new Regulations Manual will look like. Yep, on the horizon we have BOD-49 for the Insurance Authority guys and our fellow “planners” from that sphere also seem occupied with reform.
How has the pandemic impacted on how you conduct your business and advice in the region generally?
The pandemic has helped our business grow in terms of revenue generation and help us understand the efficiencies of technology. In addition, the pandemic has brought home the importance of having sufficient insurance coverage, which is keeping us very busy helping and advising clients.
From a technology perspective, we have since used it to leverage a cross-border offering in the region. For us,
How has regulatory change affected your business and advice in the region generally?
Regulatory change has and will continue to affect our business in many ways, but that is not necessarily bad. We have been aware of the changing landscape for a while and have taken steps to position the business accordingly. That said, the inevitable consequence of BOD49 has been the significant reduction in pure life assurance sales, which negatively affects this market more than it does us. The penetration of insurance in the UAE, compared to other markets, was extremely low, and this aspect of financial planning has and will most likely continue to be adviser-led.
How has the pandemic impacted on how you conduct your business and advice in the region generally?
Clearly the reaction to the pandemic has had a massive effect on how we now work. We can no longer travel freely internationally and often clients elect not to meet face to face. With the rules constantly changing we need to be nimble in the manner in which we operate and be ready to swiftly adapt when advised to by the government.
How has regulatory change affected your business and advice in the region generally?
Regulations have changed many things in our region, not least the span of areas we can advise upon. Whereas in the past the lines between topics were blurred they are now more clearly defined. You are either an insurance adviser or an investment adviser and the normal holistic approach has been forced to adapt to focus on one or the other. Some companies form alliances or have interests in other licenced entities to broaden the offering of services to their clients but clear lines must be drawn between each service offered.
We’ve found that many of our GCC clients are more willing than ever to have meetings via Zoom. In fact, they seem to prefer it to face-to-face meetings in many cases. The result of this is that we can speak to more clients each day, helping them reach their financial objectives, and our productivity has increased considerably.
Zoom and other technologies have helped us immensely and now, wherever possible, we offer a hybrid system where
In an extensive series of interviews, we speak with seven advisory giants below: Sean Kelleher, CEO, Mondial; Nigel Green, CEO and founder, deVere Group; Robert Parker, CEO Holborn Assets; Hannah Greenwood, MD, Finsbury Associates; Con Lillis CEO, Abacus Financial Consultants; Tim Searle, CEO, Globaleye and Sam Instone, Director, AES International, with all of them revealing how the pandemic and regulation has affected their businesses behind the scenes.
Q&A
How has regulatory change affected your business and advice in the region generally?
Regulatory change and development has been extremely positive in the UAE. The DFSA has created a world leading International Financial Centre and the merger of the Insurance Authority with the Central Bank has led to very positive consumer outcomes within the Federal region.
What are the key investment and advice trends that you have seen emerge this year and that you expect to continue into 2022? (ie ESG, Crypto, Multi Asset etc? Is life assurance industry in the region near finished due to lower margins etc).
A lot of our clients will have a play around in crypto. We didn’t offer or recommend ourselves. We say if you want to do it, do it outside of what we do [here], which is growing your wealth, not taking that kind of gamble, as you could [potentially] make money but lose a lot of money. A lot of clients going to bubble stocks, Neo, Tesla. And of course ESG, as well – that will become the new norm in investing.
In terms of how we invest, we really focus on using ETFs over funds. In most cases fund managers don’t often outperform. Some do but if we can get the asset allocation via ETFs and bring down costs then we do. A lot of clients favour that route, sometimes, [conversely] we will say you may also need a managed fund as most want ETFs.
Have issues such as limited movement in expat world in the region affected business flows? How are things looking re growth, staff retention and expansion and general profitability for your business in Dubai and the rest of the region?
We are expanding. I called this our year of expansion. We have expanded into the UK and we are moving (in Dubai) into DIFC Cat 4 DFSA license. And in 2022, we then plan on looking at getting a MiiFD license and expanding into Europe. We are definitely on a growth curve.
In terms of the advisers [retentions] it is really difficult, as you can imagine, to retain really good staff. When you have a really good adviser you don’t want them to leave. We have a partnership programme in place so that we are able to retain our really good advisers.
That is good for a number of reasons. It is good for the firm and it is good for the client continuity. Advisers that are with us become partners in our group and they care about the future of the firm as well, so it has really worked well for us.
Hannah Greenwood, MD, Finsbury Associates
Hannah Greenwood, MD, Finsbury Associates
How has regulatory change affected your business and advice in the region generally?
For us it hasn’t really changed our own model at all, but it has affected advice as a region. But generally if you look at insurance in the region generally and talk to providers then insurance sales, term assurance has decreased. And critical illness has decreased.
Very simply, when we went through RDR (the retail distribution review) in the UK the one that wasn’t touched was the commission on life insurance. And the reason they didn’t do that is that clients
understand that the premium is the premium and they are covered for that amount and the insurance company pay the adviser.
People need life insurance and they need advisers to explain that. Very few clients come and say we need life insurance, [Usually] the people that do [ask for] that are those that have seen something unfortunate happen with others people or family and they will come to us
It is a shame that this is a really negative affect of BOD-49. Advisers have taken a 40% pay cut and here is a lot more risk in clients cancelling that policy which may happen due to relocating. It is not a great consequence.
As for advice in the region as a whole? I’ve spoken to many people including our own regulator.
We have three different regulators here in Dubai – the IA, DFSA and ESCA, there were certain solutions being offered in the region that BOD-49 has got rid of that ESCA regulation firm and DFSA regulatory firms were still being offered and advised upon.
Unfortunately until they all start speaking to one another or come under the same regulation, I don’t know what can be done.
How has the pandemic impacted on how you conduct your business and advice in the region generally?
As a business we have a very strong year in 2020. Sadly we saw a lot of clients lose their jobs, and we have to relate on the main we did a lot better. On insurance we always led by insurance. Number one was insurance. No point investing in a portfolio if you didn’t have that part sorted. What we
did experience [last year] was a lot more proactive people around family safeguarding. Potentially through Covid, but also people had a lot more time on their hands. Our business comes from referrals or doing workshops and people come via that [route].
The downturn in the market was a positive as cash was low so people wanted to come and get involved in that.
We’ve always done everything digitally, which made it really easy to conduct meetings via zoom, so again that helped us. A lot of my team are still doing that via zoom, and I have clients in Abu Dhabi that I have been continuing doing that with. We’ve been a lot more productive with our time, so that [also] is a positive.
We’ve always done everything digitally, which made it really easy to conduct meetings via zoom, so that helped us
“
”
What are the key investment and advice trends that you have seen emerge this year and that you expect to continue into 2022? (ie ESG, Crypto, Multi Asset etc? Is life assurance industry in the region near finished due to lower margins etc).
First and foremost, while we are a financial advisory company, we are very clear that an adviser's expertise should lie in financial structure and instruments. If you want to offer the very best levels of service across all spectrums then financial markets and investments, while connected, should be considered a separate expertise. Our advisers are, of course, knowledgeable, well informed and educated about changes in the investment world and market trends but we must also continually refer back to the original goals and objectives of the client, and not get too heavily influenced by market trends when we are by and large working to long-term objectives within a given risk profile.
We have seen a considerable rise in the interest in Cryptocurrencies but we have yet to make the move into offering advice on investments. However, that is not to say we will not in the future. In fact a recent survey of the Middle East respondents Holborn carried out in conjunction with You Gov (click here to see survey) gave a clear indication of the need for more education despite robust demand around Cryptocurrencies as a precursor before making portfolio allocations.
Clients are, of course, more aware of the ESG principles, certainly among our millennial clients, and I expect this will certainly be the case from our clients of the future. We are watching both spaces with keen interest and we continue to work and consult with our strategic partners to adhere to the ESG principles, we endeavour to offer the best investment and asset management available in the marketplace, and right now we are confident we offer that.
Have issues such as limited movement in expat world in the region affected business flows? How are things looking re growth, staff retention and expansion and general profitability for your business in Dubai and the rest of the region?
Limited movement and other restrictions have forced us to work smarter and harder. We have embraced digitisation, which has made us more efficient. We have been very proud of the way Holborn employees have adapted to the new normal and continue to deliver high-level advice and service to our clients across the world.
Staff retention, growth and expansion in the Middle East remains on track despite the uncertainty and we have seen a noticeable increase in job enquiries as experienced professionals look for new opportunities within a larger organisation.
Smaller operations will no doubt face difficult challenges in the years ahead and we expect to see further consolidation in the near future. The market is going through a drastic change on a number of fronts but thankfully Holborn is now of a size and scale, and has the necessary expertise, to navigate through what can be seen as a tough transitional period so we remain extremely optimistic for the future.
Robert Parker, CEO, Holborn Assets
Robert Parker, CEO, Holborn Assets
How has regulatory change affected your business and advice in the region generally?
Regulatory changes are part and parcel of doing business particularly in markets that are growing at a fast pace, a bracket the Middle East certainly falls into. Thankfully Holborn is an international company that already operates in a number of jurisdictions that adhere to high levels of regulation such as the UK, US, HK and SA. This experience, coupled with the company's scale, has allowed us to smoothly adapt and implement the new regulations without a great deal of disruption to the day-to-day operations. The reduction in commission has necessitated more
innovation, innovations that have improved efficiency right through the chain, from the initial advice to the onboarding through to service that can be seen as a positive and improve the client experience.
However, one consequence of the regulation is that it has drastically changed the commercial viability of certain product lines, namely the promotion and sale of life and CIC insurance to the retail market. The result of which is a reduction in penetration across the sector, a sector one could easily argue needs it the most. There is no doubt this has created a gap in the market, and we along with our partners are working in the background to find a way to bridge that gap in the near future.
How has the pandemic impacted on how you conduct your business and advice in the region generally?
Covid-19 has changed our lives and it has certainly changed how we engage with our clients and conduct day-to-day business. Holborn has always embraced technology; we have been working tirelessly over the last few years to advance the company's IT infrastructure. As the company has grown, we have of course had clients
relocate to areas in the world where we may not have a physical presence, so we have previously had to find ways to engage with them remotely.
Covid-19 has changed our lives and it has certainly changed how we engage with our clients and conduct day-to-day business
“
”
Have issues such as limited movement in expat world in the region affected business flows? How are things looking re growth, staff retention and expansion and general profitability for your business in Dubai and the rest of the region?
Profitability is sound for us with increased levels of recurring income to the business although initial fees are lower this year than last. There is a tendency towards value and cost reduction as clients seek best returns. Expansion is slow as the market stalls and adapts to the new rules and regulations around Covid. With rumours of increasing capital adequacy requirements there is an air of caution among business owners.
What are the key investment and advice trends that you have seen emerge this year and that you expect to continue into 2022? (ie ESG, Crypto, Multi Asset etc? Is life assurance industry in the region near finished due to lower margins etc).
Increased consumer awareness is leading to a surge in demand for index funds, and just like in other parts of the world this area is booming.
How has the pandemic impacted on how you conduct your business and advice in the region generally?
Clearly the reaction to the pandemic has had a massive effect on how we now work. We can no longer travel freely internationally and often clients elect not to meet face to face. With the rules constantly changing we need to be nimble in the manner in which we operate and be ready to swiftly adapt when advised to by the government.
With the rules constantly changing we need to be nimble in the manner in which we operate and be ready to swiftly adapt when advised to by the government
“
”
How has regulatory change affected your business and advice in the region generally?
Regulations have changed many things in our region, not least the span of areas we can advise upon. Whereas in the past the lines between topics were blurred they are now more clearly defined. You are either an insurance adviser or an investment adviser and the normal holistic approach has been
forced to adapt to focus on one or the other. Some companies form alliances or have interests in other licenced entities to broaden the offering of services to their clients but clear lines must be drawn between each service offered.
Robert Parker, CEO, Holborn Assets
Robert Parker, CEO, Holborn Assets
How has the pandemic impacted on how you conduct your business and advice in the region generally?
Covid-19 has changed our lives and it has certainly changed how we engage with our clients and conduct day-to-day business. Holborn has always embraced technology; we have been working tirelessly over the last few years to advance the company's IT infrastructure. As the company has grown, we have of course had clients relocate to areas in the world where we may not have a physical presence, so we have previously had to find ways to engage with them remotely.
Thankfully, when the pandemic came around the vast majority of our workforce were already experienced with conducting remote meetings, or utilising cloud-based computing and docusign applications, but the mass consumer adoption has certainly made this transition all the easier. We are glad to see the rapid adoption and look forward to further innovations, so far the changes have been of significant benefit to the industry and further improving the client proposition.
Thankfully, when the pandemic came around the vast majority of our workforce were already experienced with conducting remote meetings, or utilising cloud-based computing and docusign applications, but the mass consumer adoption has certainly made this transition all the easier. We are glad to see the rapid adoption and look forward to further innovations, so far the changes have been of significant benefit to the industry and further improving the client proposition.
How has the pandemic impacted on how you conduct your business and advice in the region generally?
Clearly the reaction to the pandemic has had a massive effect on how we now work. We can no longer travel freely internationally and often clients elect not to meet face to face. With the rules constantly changing we need to be nimble in the manner in which we operate and be ready to swiftly adapt when advised to by the government.
and often clients elect not to meet face to face. With the rules constantly changing we need to be nimble in the manner in which we operate and be ready to swiftly adapt when advised to by the government.
What are the key investment and advice trends that you have seen emerge this year and that you expect to continue into 2022? (ie ESG, Crypto, Multi Asset etc? Is life assurance industry in the region near finished due to lower margins etc).
Increased consumer awareness is leading to a surge in demand for index funds, and just like in other parts of the world this area is booming.
With the rules constantly changing we need to be nimble in the manner in which we operate and be ready to swiftly adapt when advised to by the government
“
”
How has regulatory change affected your business and advice in the region generally?
Regulations have changed many things in our region, not least the span of areas we can advise upon. Whereas in the past the lines between topics were blurred they are now more clearly defined. You are either an insurance adviser or an investment adviser and the normal holistic approach has been forced to adapt to focus on one or the other. Some companies form alliances or have interests in other licenced entities to broaden the offering of services to their clients but clear lines must be drawn between each service offered.
Robert Parker, CEO, Holborn Assets
Robert Parker, CEO, Holborn Assets
How has the pandemic impacted on how you conduct your business and advice in the region generally?
Covid-19 has changed our lives and it has certainly changed how we engage with our clients and conduct day-to-day business. Holborn has always embraced technology; we have been working tirelessly over the last few years to advance the company's IT infrastructure. As the company has grown, we have of course had clients relocate to areas in the world where we may not have a physical presence, so we have previously had to find ways to engage with them remotely.
Thankfully, when the pandemic came around the vast majority of our workforce were already experienced with conducting remote meetings, or utilising cloud-based computing and docusign applications, but the mass consumer adoption has certainly made this transition all the easier. We are glad to see the rapid adoption and look forward to further innovations, so far the changes have been of significant benefit to the industry and further improving the client proposition.
What are the key investment and advice trends that you have seen emerge this year and that you expect to continue into 2022? (ie ESG, Crypto, Multi Asset etc? Is life assurance industry in the region near finished due to lower margins etc).
First and foremost, while we are a financial advisory company, we are very clear that an adviser's expertise should lie in financial structure and instruments. If you want to offer the very best levels of service across all spectrums then financial markets and investments, while connected, should be considered a separate expertise. Our advisers are, of course, knowledgeable, well informed and educated about changes in the investment world and market trends but we must also continually refer back to the original goals and objectives of the client, and not get too heavily influenced by market trends when we are by and large working to long-term objectives within a given risk profile.
We have seen a considerable rise in the interest in Cryptocurrencies but we have yet to make the move into offering advice on investments. However, that is not to say we will not in the future. In fact a recent survey of the Middle East respondents Holborn carried out in conjunction with You Gov (Click here to see survey) gave a clear indication of the need for more education despite robust demand around Cryptocurrencies as a precursor before making portfolio allocations.
Clients are, of course, more aware of the ESG principles, certainly among our millennial clients, and I expect this will certainly be the case from our clients of the future. We are watching both spaces with keen interest and we continue to work and consult with our strategic partners to adhere to the ESG principles, we endeavour to offer the best investment and asset management available in the marketplace, and right now we are confident we offer that.
Have issues such as limited movement in expat world in the region affected business flows? How are things looking re growth, staff retention and expansion and general profitability for your business in Dubai and the rest of the region?
Limited movement and other restrictions have forced us to work smarter and harder. We have embraced digitisation, which has made us more efficient. We have been very proud of the way Holborn employees have adapted to the new normal and continue to deliver high-level advice and service to our clients across the world.
Staff retention, growth and expansion in the Middle East remains on track despite the uncertainty and we have seen a noticeable increase in job enquiries as experienced professionals look for new opportunities within a larger organisation.
Smaller operations will no doubt face difficult challenges in the years ahead and we expect to see further consolidation in the near future. The market is going through a drastic change on a number of fronts but thankfully Holborn is now of a size and scale, and has the necessary expertise, to navigate through what can be seen as a tough transitional period so we remain extremely optimistic for the future.
one consequence of the regulation is that it has drastically changed the commercial viability of certain product lines, namely the promotion and sale of life and CIC insurance to the retail market
“
”
Hannah Greenwood, MD, Finsbury Associates
Hannah Greenwood, MD, Finsbury Associates
How has regulatory change affected your business and advice in the region generally?
Regulatory changes are part and parcel of doing business particularly in markets that are growing at a fast pace, a bracket the Middle East certainly falls into. Thankfully Holborn is an international company that already operates in a number of jurisdictions that adhere to high levels of regulation such as the UK, US, HK and SA. This experience, coupled with the company's scale, has allowed us to smoothly adapt and implement the new regulations without a great deal of disruption to the day-to-day operations. The reduction in commission has necessitated more innovation, innovations that have improved efficiency right through the chain, from the initial advice to the onboarding through to service that can be seen as a positive and improve the client experience.
However, one consequence of the regulation is that it has drastically changed the commercial viability of certain product lines, namely the promotion and sale of life and CIC insurance to the retail market. The result of which is a reduction in penetration across the sector, a sector one could easily argue needs it the most. There is no doubt this has created a gap in the market, and we along with our partners are working in the background to find a way to bridge that gap in the near future.
We have seen a considerable rise in the interest in Cryptocurrencies but we have yet to make the move into offering advice on investments
“
”
Thankfully, when the pandemic came around the vast majority of our workforce were already experienced with conducting remote meetings, or utilising cloud-based computing and docusign applications,
levels of regulation such as the UK, US, HK and SA. This experience, coupled with the company's scale, has allowed us to smoothly adapt and implement the new regulations without a great deal of disruption to the day-to-day operations. The reduction in commission has necessitated more innovation, innovations that have improved efficiency right through the chain, from the initial advice to the onboarding through to service that can be seen as a positive and improve the client experience.
However, one consequence of the regulation is that it has drastically changed the commercial viability of certain product lines, namely the promotion and sale of life and CIC insurance to the retail market. The result of which is a reduction in penetration across the sector, a sector one could easily argue needs it the most. There is no doubt this has created a gap in the market, and we along with our partners are working in the background to find a way to bridge that gap in the near future.
How has regulatory change affected your business and advice in the region generally?
Regulatory changes are part and parcel of doing business particularly in markets that are growing at a fast pace, a bracket the Middle East certainly falls into. Thankfully Holborn is an international company that already operates in a number of jurisdictions that adhere to high
Hannah Greenwood, MD, Finsbury Associates
Hannah Greenwood, MD, Finsbury Associates
but the mass consumer adoption has certainly made this transition all the easier. We are glad to see the rapid adoption and look forward to further innovations, so far the changes have been of significant benefit to the industry and further improving the client proposition.
Q&A
Q&A
