*According to the 2012 Middle East Investment Panorama (MEIP) report from Insight Discovery
GCC based financial advisors and retail investors are becoming increasingly ‘risk tolerant’ and optimistic despite various challenges like local and global economic volatility, regional regulatory uncertainties and the prevailing geopolitical situation. This lead finding was revealed by the latest edition of the MEIP report issued today by strategic research consultancy, Insight Discovery.
Being the largest survey of independent financial advisers and wealth managers in the region, this annual report gives panoramic insights into various aspects of the GCC’s fast growing and continuously evolving financial services industry. Insight Discovery conducted this survey in partnership with Amundi Asset Management, Franklin Templeton, Morningstar and Standard Life.
Other key findings of the 2012 MEIP report:
60% of financial advisors prefer global emerging market equity funds, while the ‘hottest’ alternative asset classes are gold, commodities and listed real estate
The vast majority (83%) of GCC based financial advisers use products and services of international asset managers
Financial advisers dealing with international life insurance companies has risen substantially, to 63%, but growth opportunities still exists
The potential for family Takaful remains underexploited, with fewer than half of financial advisers saying they see it as a major opportunity for life insurers
There are approximately 3,700 financial advisers working in the UAE, a far bigger number than previously estimated
Commenting on the 2012 MEIP report, Nigel Sillitoe, CEO of Insight Discovery, said:
“Broadly speaking, there are clearly more opportunities than challenges for the region’s burgeoning financial services industry. Increasing ‘risk tolerance’ is a welcome sign for future growth as the industry matures and becomes more sophisticated. The GCC’s fast growing economies continue to attract expatriates who relocate to this region mostly to save and build wealth. This aspect represents a huge opportunity for financial advisers, life insurance companies and international asset managers as an increasing number of savings-oriented expatriates are expected to seek their advice, services and products. The industry remains under the category ‘work in progress, but the progress is undeniable’.”
The report states that there is a rising number of financial advisers in the GCC who use the products and services of international life insurance companies, international asset management companies, or both.
It revealed that international life companies have become more important as distributors of investment funds sourced from the international asset managers.
Dhiraj Rai, Director, Gulf & Eastern Mediterranean, Franklin Templeton Investments, said:
“The GCC continues to be one of the most important growth markets for us. We believe there is tremendous potential for both international asset management and international life companies to do business with financial advisers in the region. As the market matures, financial advisers will increasingly look at funds with a good reputation, fund manager credentials and excellent investment performance. The fact that emerging market equity funds are the most preferred asset class is a further testimony to this increasingly global outlook amongst GCC financial advisors and their clients.”
In the survey, financial advisers noted that big international asset managers are active in the region but there are still opportunities for new entrants from among the leading life companies. It also mentions that financial advisors want international life companies to have an on-the-ground presence with excellent service support, so that they can serve their expatriate clients better.
Fadi El-Khoury, SVP – Head of Distribution Middle East, Amundi Asset Management, said:
“For many international asset management firms, the GCC has historically been an institutional market. We are currently witnessing the rise of third party distribution as the regional addressable market grows. This is attributable to factors such as repatriation of assets to the region as well as organic growth of wealth. Rolling with this trend, we observe on the one hand, regional banks setting up robust platforms for fund distribution along with the manpower to match. Additionally, today we have many insurance brokers in the GCC representing a huge potential as mutual funds are part of their core offering”
It can be seen in the report that there is still a significant minority of financial advisors who are not using the products and services of international life companies. This means that the international life companies still have room to grow their businesses across the GCC by reaching out to more financial advisors. .
Reza Yazdi, Head of Sales – Dubai, Morningstar, said:
“It was observed that the bulk of the current and future demand for products of international life and asset management companies came from South Asian expatriates as most of the financial advisers and their clients were from that region. Currently, GCC nationals do not actively seek these international financial products as they seem to be satisfied with the generous government sponsored social security programs. If this situation changes in the future, GCC national households will collectively represent a huge potential market for international asset management companies, life insurance companies and financial advisers.”