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Portfolio Interview: ‘Clients Don’t Just Want Double-Digit Returns’
Are wealth managers, operating in the region, local or foreign, getting squeezed by the economic slowdown on the one hand and high expectations from their clients on the other?
The economic slowdown brings with it a multitude of challenges, more so for the financial sector simply because we deal directly with customers’ wealth. Clients have always expected high standards from their wealth managers, but in recent years the nature of these expectations has changed. Clients don’t just want double-digit returns at any cost, or super-exotic investments. They simply want transparency, understanding about where and how their wealth is placed, and more importantly they are looking more towards collaborative bankers rather than product-sellers. To some extent, this has always been the case, but risk-control and simplicity have come more into focus after last decade’s economic crisis.
Do you see increasing competition between local and regional and international wealth management firms?
The UAE has a unique advantage geographically which makes it a destination of choice for many wealthy families and businesses around the globe. This naturally attracts global wealth management firms to establish a presence in the UAE in an attempt to target their potential customers. The UAE government’s support in making UAE a preferred financial center, and an advanced regulatory environment which is fast catching up with global counterparts makes it easier for several players.
Although the competition is fierce, there is still room for all. We need to compete on innovation and service quality while offering convenience to customers.
Is Islamic wealth management an emerging segment within the overall wealth management industry? What are its prospects?
Yes. Islamic Wealth Management, and Islamic banking in general, has been growing much faster than conventional banking over the last few years. With the rise in the global popularity of Sukuk, Islamic funds and REITs for example, we see more and more players looking to participate in this space.
In terms of customer reach, we see demand from the non-Muslim population as well, who are looking for responsible and stable investments, a characteristic of Islamic banking in comparison to its conventional counterparts.
Are wealth management firms in the region realizing the urgency to enhance the skills and engagement of relationship managers (RMs) to retain and expand client base?
Enhancing the skills of relationship managers and providing them with proper training is an ongoing challenge for a trust-based industry like wealth management, whether it is conventional or Islamic.
At Emirates Islamic, we follow a three-tiered approach – functional/technical knowledge – through internal and external certifications and courses; soft skills development – through coaching, role-plays, ongoing learning on the job, and engaging feedback. Most importantly, the importance of ethics and responsibility towards clients – which is traditionally managed through controls and checks, which we have in place – are inculcated as part of our organization’s culture.
Do wealth managers in the region see UHNWIs as the prime opportunity, or are they targeting other segments such as the HNWIs and other affluent segments as well?
What makes the UAE and the region a unique platform for wealth managers is that every single segment is a potential target for acquiring customers, so wealth managers cannot afford to ignore those segments and restrict themselves to a single segment. On the other hand, the needs for each segment vary and therefore they have to be approached in various different ways. Most wealth managers roll out in phases – like we started with the affluent segment. We are now exploring the Ultra High Net Worth Individuals segment on one side and emerging affluent segment on the other. Our approach will be customized for each segment.
Rich investors from this region often seek greener pastures overseas when it comes to investing. Do you believe this trend need to be reversed and wealth managers have a greater role to play here in terms of convincing their regional clients to look for opportunities here?
This has traditionally been the case due to two reasons: wealth managers who are primarily coming from external markets are more comfortable with managing investments abroad. The second reason is that there were limited investment options here. This is changing now. Wealth management firms have been operating here for quite some time and have gained comfort and confidence in dealing with the local/regional market. More importantly, product development and innovation is picking up, especially on the Sharia-compliant wealth management side. There are more options nowadays than before, and more offerings that are in line with global standards are being introduced to the market. On the other hand, investment regulations have changed over the past years, and while Dubai is moving towards achieving its goal to become the global capital of Islamic economy, it has established itself an attractive investment hub for regional and global investors.
Could you please share with us the growth in your assets under management?
Quarter-by-quarter, Emirates Islamic ranks among the fastest growing medium-sized banks in the UAE. Our AUMs have also shown a solid growth, more than doubling since the re-launch of our Wealth Management proposition last year.