Client losses at top of Dubai advisers 2017 concerns: report

A survey of investment advisers in the Middle East has found many of the region’s investment advisers are concerned about losing clients, amid an uncertain political future and increasing regulatory monitoring across GCC countries.

The Middle East Investment Panorama (MEIP) 2016 survey, entitled ‘The Year of Reckoning?’ has been published by Insight Discovery, the Dubai-based market intelligence and strategic communications consultancy.

In a statement announcing the publication of the survey, Insight points to a “major new problem” for some advisers in Gulf Cooperation Council (GCC) countries, with two in every three advisers that took part stating that they clients’ lack of willingness to commit to invest as a challenge.

The current geopolitical situation is also seen by advisers as being worse than the Arab Spring of 2011 and new life regulations will impact advisers and asset managers. There are however, some positives including a “potential bonanza” in Saudi Arabia, according to the report.

‘Major change’

Nigel Sillitoe, chief executive of Insight Discovery, said: “This marks a major change. In the past, advisers have mainly been concerned by changes to the regulatory environment or competitive pressures. What we see today is that advisers are worried about their whole business model at a more fundamental level.

“In a year that has already brought Brexit, the election of Donald Trump, and increasing turbulence throughout the Middle East, it is not surprising that investors are uncertain; but I believe this years’ survey marks a sea-change in attitude and a growth in risk-aversion that is unprecedented,” he said.

Since its launch in 2010, Insight Discovery has dubbed its MEIP survey as its “flagship” annual publication. It seeks to generate commercially valuable and actionable insights for international and local asset managers and international life companies who want to deal with (broadly defined) investment advisers in the six Gulf Cooperation Council (GCC) countries – Qatar, Bahrain, Kuwait, Oman, Saudi Arabia and the UAE.

New Life regulations

A key feature of the report is a discussion of the UAE’s new life regulations, by Clyde & Co., the legal partner of MEIP 2016, that are “arguably the biggest shift in the regulation of the UAE’s life insurance market in the modern era,” the statement said.

Other findings of the MEIP 2016 report include:

  • Just 24.0% of advisers see geopolitical risks as presenting a commercial opportunity, while 58.0% see a potential challenge. (In 2011, in the wake of the Arab Spring, the corresponding figures were 30.2% and 62.7%.)
  • More than one in five (22%) see the growth of robo-advice as a threat to their business
  • Four in five (82%) feel that mutual funds have to become more competitively priced
  • Almost one in three advisers (29%) will be cutting clients’ exposure to GCC equities.
  • To counter the threat of client risk-aversion, 70% see technology and electronic processing as a major opportunity, showing that they believe efficiency gains can compensate for macro-uncertainty.

‘Adapt to survive’

Brendan Dolan, regional director at Old Mutual International, said: “‘The adviser landscape is changing rapidly and it is important advisers adapt their business model if they are to survive in this new world. Insight Discovery highlights how advisers in the region are increasingly outsourcing the investment process to professionals.

“Building a centralised investment process is a key step in an adviser’s transition journey, helping them evolve and build a sustainable business.’

ABOUT THE AUTHOR
Gary Robinson
Deputy Editor, International Investment and Head of Video at Open Door Media Publishing. A fully qualified journalist and filmmaker with more than 20 years' financial services experience, both as journalist and originally as an IFA.

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