The UAE’s wealthy are now reluctant to take risks and are expecting lower returns on their fortunes, as the global health outbreak has impacted investment perception and risk profiles, according to Standard Chartered’s latest survey. 

Many affluent consumers in the country have also become less confident about their finances and changed their life goals following the pandemic, although they continue to seek new financial products to ensure financial stability, the survey revealed.  

Standard Chartered’s findings are highlighted in its Wealth Expectancy Report 2021, which includes feedback from surveyed 15,649 emerging affluent, affluent and high-net-worth individuals in wealthy markets across Asia, Africa, the Middle East and the United Kingdom. In the UAE, a total of 1,053 rich individuals were surveyed. 

The bank’s findings echoed other studies that underscore the changing behaviours of wealthy individuals across the globe. According to EY’s 2021 report, the health crisis has prompted affluent people to financially de-clutter their lives and refocus on their most important priorities. 

“[Wealth management] clients are becoming more risk-averse, are increasingly focused on achieving personal goals aligned to their purpose, and want to enhance their financial protection, diversification and security,” EY’s report said. 

Resetting life’s goals 

In Standard and Chartered’s study, nearly nine in ten (88 percent) said they have reset their goals in life due to the health outbreak. At the same time, nearly half (43 percent) said the pandemic has diminished their confidence in their finances, preventing them from taking the actions necessary to achieve new goals. 

“The global pandemic impacted both the investment perception and risk profiles of UAE affluents. It prompted them to reset their financial priorities and encouraged them to seek new financial products, which increased their rate of savings for the future while being more engaged in tracking their financial performance,” said Owen Young, Regional Head of Wealth Management, Europe, Middle East and Africa, at Standard Chartered Bank. 

When resetting their life’s priorities, the UAE’s affluent consumers look at ways to ensure they have a healthier future and that their children will have enough financial support for their studies. Over a third (47 percent) of people said they have set the goal to improve their health, while 39 percent said they have allocated more for their children’s future education and financial support. 

To meet their goals, the wealthy are advised to consider strategies that would help them grow their wealth. This approach requires more than just keeping money in a bank account, but Owen said that rich people’s risk-averse attitude could hinder them from making their money work for them. 

“The UAE affluents have become more risk averse and are actively adapting their finances to the global economic situation with eyes on global market volatility and interest rate levels,” said Owen. 

“A sizable percentage of the affluent sample in the UAE expect future returns to drop and are aligning their portfolios to this new normal.” 

Dubai has been a favourite haven for the rich. During the first six months of the year, an estimated 2,000 millionaires moved to the emirate, bringing Dubai’s population of high-net-worth individuals (HNWIs) to 54,000 in June 2021, up by nearly 4 percent from 52,000 last December 2020. 

(Reporting by Cleofe Maceda; editing by Seban Scaria )

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© ZAWYA 2021