The majority of GCC-based financial advisers and asset managers surveyed in the fifth Middle Eastern Investment Panorama said they would favour partner companies with a local office over those who rely solely on technology and social media to conduct business with local companies.
“Most advisers prefer not to use online forums for dealing with the companies with whom they work, and warn that international life companies and asset managers should not see social media as an important sales tool,” said the report, conducted by Insight Discovery.
Increasingly global
Additionally, nearly three quarters of advisers in the region have attended seminars organised by international partners in the last six months, reflecting an increasing demand for global partnerships.
However, the survey also found that fewer advisers are committed to living and working in GCC countries on a long term basis than last year, with just 57% saying they planned on staying indefinitely, down from 65% in 2013.
The main factor influencing this was the rising average cost of living throughout the region, which 74% of advisers ranked as a threat, while just 24% said they saw the GCC as an area of opportunity.
The UAE was ranked as particularly expensive, while Bahrain was found to have living costs roughly half the size of the rest of the region.
“It is difficult to avoid the conclusion that the advisers, collectively, have become more cautious about the prospects of the region in general and the UAE in particular,” the report added.
Despite this, many advisers see the predominance of non-resident Indians in the area as a growth opportunity for its life insurance industry, while many are looking to increase their promotion of structured products.
Retail Distribution Review
Chief executive of Insight Discovery, Nigel Sillitoe, said that, like last year, 64% of advisers see changing regulations as an opportunity rather than as a challenge.
“Much of the impetus for change has come from the Retail Distribution Review in the UK,” he added.
“Those advisers who are able to comply with the increased requirements see them as a barrier to entry to the market place.”
He described GCC regulatory environments as “opaque”, adding that regulators sometimes inadvertently give advantages to some participants over others.
“The pace of change and reform is usually slow; the advisers and international life companies often take the view that being able to comply with the UK’s regulatory regime is a lot more important than meeting the detailed requirements of regulators in the GCC region.”
The report also noted that Franklin Templeton and Zurich International Life currently hold the respective positions of most favoured asset manager and life company in the region.
Last year’s survey found that the Middle East represented huge growth opportunities for wealth managers and financial advisers, with regulatory changes in the UK serving to boost rather than hinder opportunities in the region.
