The MEIP report explores the attitudes and responses of GCC-based financial advisers and wealth managers and this year’s report largely spells out encouraging news. We learn that as a whole, advisers and their clients are becoming increasingly ‘risk tolerant’ and ‘optimistic’ despite the various economic challenges. Given that the MEIP report is the largest survey of its kind in the entire region, its findings are well noted by all interested parties. So far so good.
Delving further into the report, we learn that 60% of financial advisers prefer global emerging market equity funds, while the ‘hottest’ alternative classes are gold, commodities and listed real estate - no surprises there given that such assets have long been favoured by the indigenous populations of this region. Nor is there much surprise that the vast majority (83%) of GCC-based financial advisers confirm they use the products and services of international asset managers.
Nor was it surprising to have confirmed that the number of financial advisers dealing with international life insurance companies has risen substantially, up to 63%.Those of us already well established in this field know that plenty of growth opportunities in this area remain. In particular, the potential for Islamic insurance such as Takaful, which is a type of pooled insurance system that members contribute to and guarantee each other against loss or damage, is growing. This chimes with growing interest in the concepts of Shariah investing generally.
But the statistic in the report that stood out for me was the estimate that there are approximately as many as 3,700 financial advisers working across the Emirates - a far bigger number than previously estimated and much higher than ever expected.
Despite the sheer size of the UAE’s development as a regional business and financial hub, and even accounting for competitive forces to kick in to mop up financial growth in the region, 3,700 sounds like a lot of financial advisers. Even MEIP’s report suggests that the region is “over advised” and says the revelation will add weight to calls for increased regulatory approval and supervision of advisers.
While the report’s definition of adviser is admittedly “broader” than the concept of how an IFA operates back in the UK, it’s important that growth opportunities are not muddied by clients who are confused over who is and isn’t an adviser.
Increased regulatory approval may indeed be the answer. But in the meantime, we need to ensure international advisers keep the advisory benchmark high. Let’s not allow a number to stop growth opportunities in its tracks.