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How is the GCC wealth management industry facing up to challenges?
The industry is not only evolving, it’s also getting more resilient to take such events in its stride. The foremost factor is whether wealth managers are doing enough to maintain diversification of the assets of clients so that they are somewhat alienated from the risk. The second critical aspect is to maintain diversification in terms of geographies. Clients particularly in this region want to diversify not only in terms of asset classes but also in terms of jurisdiction. Going forward, it’s the service not products that’s going to be the differentiator.
Are there any seemingly “safe” investment opportunities left now?
We believe opportunities are and will always be there for the regional wealth management industry. We are in an era where volatility is the new norm. Having said that, ‘safe’ and ‘unsafe’ are very relative terms to an investor. What matters more is a client’s portfolio.
What’s the key value proposition now to clients? Do you tell them that the days of looking at high-yield opportunities with rose-tinted glasses are over?
We believe in understanding a client’s return objectives and matching them with their near- and long-term needs. Additionally, adapting to the changing environment is key for us. We’ve an entire spectrum of products that can be further customised to each client’s requirement.
Clients today are very discerning and their portfolios are becoming dynamic in some emerging markets such as India. We’re also responding to our clients’ needs by introducing new and innovative products. For example, we’ve launched this year the international mortgage solution for the UK. Residents here can borrow an international mortgage on residential property in England and Wales, whilst paying monthly instalments in the UAE in dirhams. Additionally, we partnered with LIC International, a JV company of LIC of India, to introduce the first co- branded credit card of its kind for their customers in the UAE. We are also launching a new LIC card on September 1.
Is differentiation, client interface, AUM size, branding, digitization, innovation in services and product offering becoming major planks of wealth management firms’ strategy?
Whilst it’s a mix of all of these, we believe the other key differentiating factor is the standing of the institution and the service proposition. We believe it’s not just pricing and product that matter, but equally important is understanding clients and the quality of distribution. The industry is moving away from the traditional portfolio management and discretionary fee- based models to offer a holistic and integrated approach to wealth management.
Do you see increasing competition between local and regional wealth management firms on one side and international ones on the other?
Competition is always healthy and we keep a close eye on what our local and regional colleagues are offering to their clients. Given the demographic split of the country we live in, international wealth managers will always be part of the industry. We will continue to however, see consolidation amongst our global competitors as most firms are revisiting their international strategies.
What is the most important investment risk that you caution your clients about?
If you’re not diversified that’s the greatest risk. 90% of your return on investment is determined by your diversification and not by your investment options. Keep your assets diversified and keep them for the long term. Additionally, re-investment risk is a significant threat to a client’s portfolios and is very easily overlooked.