Nearly two thirds (61%) of expats have yet to make any tax or estate planning arrangements for their children abroad, “indicating a keen interest in discovering tax-efficient wealth transfer solutions”, according to Lombard Odier’s just released 2024 United Arab Emirates (UAE) Expat Study.
The global wealth and asset manager with a 60-year legacy in the Middle East said on 30 May that the study, which focusses on the needs, goals and experiences of high-net-worth (HNW) expatriates living in the region, revealed “a strong and growing demand for sophisticated wealth management advisory services, fuelled by low levels of familiarity with local regulations and existing wealth planning arrangements, as well as a growing intent from HNW individuals to remain and/or retire in the region”.
Lombard Odier study gathered the views of 150 HNW expats living in the United Arab Emirates via an online survey conducted by CoreData Research in November 2023, with field research conducted in collaboration with M/HQ and the Swiss Business Council.
Respondents were Western expats from the Americas and Europe with at least $1m of bankable assets who fall into the following professional categories: executives and employees/corporate executives, entrepreneurs/company founders, independent contractors and retirees.
The study highlighted the strong draw of the UAE for Western expats, more than 40% of whom cite high quality of life and investment opportunities as the primary drivers for moving to the region.
Younger HNWs primarily locate for business purposes, for example to benefit from the region’s strong regulatory or legal framework (29%) or to create a start-up (25%).
A quarter of expats also stated their desire to settle in the region permanently, a figure that rises to 49% amongst those aged 51 and above.
Yet the survey points to certain challenges faced by expats in transferring wealth across borders, including difficulties in finding the right wealth manager (cited by 48% of respondents), overcoming language barriers and differences in business culture (37%) – particularly for younger expats aged 18-34 (67%) – and concerns over losses due to market fluctuations or geopolitical risks (23%).
Lombard Odier said this underscored the need for personalised private banking services that help expats acclimatise to their surroundings and understand the region’s regulatory landscape and cultural norms and sensitivities, as well as a demand for products and strategies that can provide downside protection in volatile markets.
In addition to these challenges, expats’ knowledge still holds scope for improvement, as evidenced by only 27% feeling “very familiar” with the tax implications of holding wealth assets outside the UAE.
Moreover, a notable 61% of expats have yet to make any tax or estate planning arrangements for their children abroad, indicating a keen interest in discovering tax-efficient wealth transfer solutions. Private banks are well positioned to strengthen expats’ understanding, given that a third (32%) of expats place value on advice regarding international laws and tax regulations.
In this vein, there has been an uptick in demand for expert wealth management amongst expats in the UAE, with over half (53%) showing a preference for private banks for their estate planning needs – a figure that increases to 65% amongst those in higher wealth brackets and aged 51 plus, highlighting a deep trust in these institutions.
The allure of sophisticated wealth management services is cited by a quarter (24%) of Western expats as a driver behind their move to the UAE.
There has been an uptick in demand for expert wealth management amongst expats in the UAE, with over half (53%) showing a preference for private banks for their estate planning needs
There is also a growing interest within the expat community towards environmental, social, and governance (ESG) investments, with plans to increase sustainable allocations from 14% to 20% within the next five years. The large proportion of expats looking to purchase property in the UAE suggests that investing in sustainable real estate may also hold appeal.
Amer Malik, head of Middle East International at Lombard Odier Group said: “In the dynamic wealth management landscape of the UAE, the growing HNW expatriate community is increasingly seeking sophisticated and trusted advisors to help strengthen their knowledge across a range of issues, from wealth preservation and international wealth transfer to the taxation and regulatory implications of a relocation to the UAE.
“Our latest study identifies a marked preference amongst HNW expats for private banks as advisors of choice. At Lombard Odier, we are dedicated to providing our clients with customised solutions that integrate their goals and needs over different timespans and generations, enabling them to fully leverage the unique financial landscape and quality of life the UAE offers.
“Lombard Odier’s growing presence in the UAE, highlighted by the Abu Dhabi office and the opening of our new office in the dynamic Dubai International Financial Centre (DIFC), is a testament to our commitment to serving the unique needs of the HNW expatriate community and further cements Lombard Odier’s reputation as a trusted advisor in the Middle East.”
