Consolidation has long been the buzzword in the Middle East advice market, not least in the UAE following the introduction of BOD49.
So, it comes as little surprise that 45% of firms responding to International Adviser‘s recent survey said they were either already engaged in or are actively looking to make deals.
In the long-term, however, 66% of firms said they are looking to make acquisitions, with only 14% saying they would want to sell.
But with such a mismatch in supply and demand, more players could be tempted to consider offers if the price is right.
Regulatory uncertainty
The survey also found that one of the biggest concerns for the industry is the impact of the merger between the Insurance Authority (IA) and the Securities and Commodities Authority (SCA).
When asked about how it could affect advice businesses, responses were mixed.
Around 35% believe it will have a negative impact on their firm, with the same percentage saying the opposite.
The remaining 30% don’t believe it will have any impact on their business.
Family law reform
Another concern for the sector is the recent changes made to inheritance and divorce laws in the UAE.
The amendments set out that expat couples married abroad who are seeking a divorce can apply the laws of their country of origin in the legal proceedings.
When it came to inheritance, family assets have historically been distributed according to Sharia principles – which proved difficult for expats as they often resulted in unequal divisions between men and women.
But under the changes, the distribution of a person’s estate is dictated by citizenship, meaning that the inheritance law of their country of origin applies if a Will is missing.
These significant shifts within the family law space, however, have left advisory firms confused and wondering whether they can be fully phased in.
IA’s research found that most advice businesses in the UAE (65%) don’t believe the sector is suited to accommodate the amendments and fully implement them on behalf of their clients.
Wealth tax
One of the hottest topics at the moment, not just in the Middle East but around the world, is finding viable solutions to ease the economic burden of the pandemic.
Some countries decided to pass a one-off contribution for the wealthy, others have increased taxes for the richest groups in society for a set amount of time, or created units going after high net worth (HNW) individuals and families.
Speculation of a similar move in the UAE spread after neighbouring Gulf country Oman considered introducing an income tax for “high earners”.
But advisers strongly believe that the country will not introduce a wealth tax for HNWs anytime soon, with only 35% of respondents believing this could happen within the next 12 months.
