The ninth edition of the Middle East Investment Panorama (MEIP), published by consultancy Insight Discovery, has identified three key ways in which clients see scope for improvement in their financial advisers.
UAE residents said there are three major ways in which the image of advisers could be improved further: more transparency on fees and commissions (sought by 39% of expats); a tougher stance by local regulators in relation to scams and unregulated firms (37%); and industry-recognised qualifications for advisers (15%).
MEIP is a comprehensive annual report on financial advice landscape in the Gulf Cooperation Council (GCC) region. For the first time, it included interviews with 1,000 UAE residents, many of whom were clients of the advisers.
The economics of the business have deteriorated - as higher costs for compliance, regulation and much else besides have coincided with caps on commissions.”
In particular, the report found:
- Some 43% of advisers see clients' lack of willingness to invest as a challenge
- 37% of advisers see competition from other advisers as a threat.
- A number of advisory firms have decreased their total number of advisers - although a couple of well-known firms have attracted new advisers. At one extreme, a firm surveyed reported that the number of advisers it employs had fallen from 40 in January 2018 to just five in January 2019; but at the other extreme, one firm increased the number of advisers it is employing from 10 to 25.
Speaking at the launch of the report, Nigel Sillitoe, CEO of Insight Discovery, noted: "Conditions have been difficult for the advisers. The expat clients have become more informed and demanding. The geopolitical environment in this part of the world has been difficult. The economics of the business have deteriorated - as higher costs for compliance, regulation and much else besides have coincided with caps on commissions."
Paul Evans, head of Middle East at Old Mutual International, added: "The MEIP is a fascinating insight into the state of the financial advice sector in the GCC, and we were delighted to be an integral part of it. It is clear that financial advisers still play a vital role for expats, but more needs to be done in terms of transparency and regulation in order to increase the reputation of the industry further. It is also concerning that many individuals feel they are only able to save a small proportion of their salary.
"The retirement landscape is shifting in the region to bring savings policy more into line with worldwide trends, which is likely to place more responsibility on individual saving. High quality, trusted advice will be critical to help people plan accordingly."
Sillitoe concluded: "Overall, the main message from this report is very positive. The advisers have risen to the various challenges. Collectively, the advisers have invested heavily in being able to meet the requirements of clients and regulators. For those who remain, these efforts have borne fruit. Much more than in previous years, it is clear that the industry in the GCC is changing - and for the better.
"Across the region, quality trumps quantity in financial advice. There is also plenty of interest in the Middle East as this project attracted 21 partners, without the support of Old Mutual International, Morningstar, Financial Risk Solutions (FRS) and other firms we wouldn't have been able to produce such a groundbreaking report."