Dubai: Financial advisers and gatekeepers in the Middle East have increasingly invested in their businesses over the past 12 months in response to volatile markets, more demanding clients and the regulatory burden with the majority of advisory groups and banks seeing growth in revenue.

This is according to the 12th edition of Insight Discovery’s Middle East Investment Panorama (MEIP) report.

Based on detailed insights from CEOs of leading regulated advisory firms and fund selectors from banks who responded to this year’s survey, many firms have expanded their businesses via larger numbers of clients and increased activity, on average, by each client.

This includes a focus on M&A, with well over half of respondents expecting regulatory changes to boost M&A activity, leading to a less crowded marketplace.

“This may well be because these respondents see that the introduction of BOD 49 and other regulatory changes will bring around a wave of M&A activity and that their firms will be among the winners,” said David Kneeshaw, CEO of IFGL, which owns Friends Provident International.

Other key findings in the survey include the top five ways clients are changing. These include: more knowledge as access to information increases; higher expectations on disclosure and transparency; greater focus on more product options; preference for more online and mobile access; and seeking more value from the services they receive.

As a result, the top three ways to differentiate an advisory offering are: ensure advisers are properly qualified; embrace digitalisation; and generate referrals from existing clients.

“It is clear that the advisers have passed the test of the past year,” said Frank Carr, Chief Marketing Officer of technology firm Financial Risk Solutions. “They have achieved this by investing in their businesses in order to deliver what the clients want in a more efficient manner.”

Key survey takeaways

  • 57% expect regulatory change will boost M&A activity, with the result that the number of competitors falls.
  • 67% report their revenues have grown over the last 12 months or so, while only 5% have suffered a contraction in revenues – invariably due to the loss of clients.
  • 88% anticipate that their businesses will grow over the coming 12 months – and a similar number are upbeat about the potential for new technology and data analysis to improve their offerings to clients.
  • At least 50% see each of geopolitical instability, inflationary pressures and rising interest rates as challenges.
  • 53% fret about competition from unregulated firms even though regulations continue to tighten.
  • 61% believe greater knowledge and understanding among clients is of primary importance.
  • Discretionary fund management (DFM) services, (mostly) sourced from a third-party provider, are popular – 71% recommend DFM services to clients and another 6% are considering this.
  • The most important selection criterion for an external provider of DFM services is its ability to smooth returns in an environment of volatile markets.

“Over the years, the advisory market of the GCC region has grown to the extent that it represents a significant opportunity for asset management companies, wealth managers, international life insurance companies and other groups. This year’s research further reinforces this,” explained Nigel Sillitoe, CEO and Founder of Insight Discovery.

Partners in this project included Friends Provident International, Financial Risk Solutions, Ardan International, Kane Solutions, GBST, Lazard, LIBF, RL360, and Schroders.

In addition, the 12th annual report includes spotlights on several key aspects to the region’s investment landscape:

  • Global sovereign wealth allocations
  • Insights into the GCC pension fund landscape
  • Key changes to the UAE regulatory environment
  • The private wealth and family office segment
  • Opportunities in Israel

All details and insights from the report can be viewed here