Dubai - The ninth edition of the Middle East Investment Panorama (MEIP) was released today by leading consultancy Insight Discovery. Launched on 3 March 2019 MEIP is a comprehensive annual report on financial advice landscape in the GCC, for the first time ever it included interviews with 1,000 UAE residents.
The highlights from the report are:
1,000 UAE residents said that Recruitment companies (24%); Credit card companies (18%); Loan agents (18%); Call centres (12%); Real estate agents (11%); Advisers from banks (6%); Independent financial advisers (5%); All others (5%). had the worst reputations in the UAE
In general, advisers fared well - or at least (far) less badly - than the other seven groups who were considered
The survey respondents were more likely to see independent financial advisers as having the worst reputation if those respondents were: single rather than married (with 6% versus 3% of people respectively); Emirati rather than expat (6% versus 5%); in Abu Dhabi (with 6%) rather than Dubai(5%) or Sharjah (3% each); and aged 25-29 (7%) rather than 35 years and over (4%).
The independent financial advisers are viewed poorly by people who are earning between AED 65,001 and AED 70,000 (US$17,711 and US$19,073) per month. No fewer than 29% of the respondents in this group said that the advisers had the worst reputation in the UAE.
The nationalities of the advisers match those of the (wealthier) expats whom they serve.
The number of financial advisers working in the sector has shrunk dramatically, with many viewing the arrival of new firms as a major threat
49% of UAE residents only able to save 5% or less of their monthly income.
Research showed that UAE residents believe there are three major ways in which the image of advisers could be improved further: more transparency on fees and commissions (sought by 39% of expats); a tougher stance by local regulators in relation to scams and unregulated firms (37%); and industry-recognised qualifications for advisers (15%).
As for the advisers themselves, the MEIP research found that many perceive competition from other advisers as a threat, with some seeing their business contract so much that they have had to move outside of the region. A number of advisory firms have decreased their total number of advisers – although a couple of well-known firms have attracted new advisers. At one extreme, a firm surveyed reported that the number of advisers it employs had fallen from 40 in January 2018 to just five in January 2019; but at the other extreme, one firm increased the number of advisers it is employing from 10 to 25.
Speaking about the launch of MEIP, Nigel Sillitoe, Chief Executive Officer (CEO) of Insight Discovery said, “Our survey amongst UAE residents proves that financial advisers have been working in a challenging environment, which explains why there are fewer advisers working in the UAE. One exciting development, which will help advisory firms who want their perception to improve, is that the demand from UAE residents for more transparency will soon be addressed as the Insurance Authority, which regulates insurance brokers, has introduced draft regulations which proposes a cap on commissions for lump sum investments and fixed-term contractual plans. The draft also issues clear guidelines on the selling of insurance and investment products to safeguard the interest of customers and stipulates that advisers must provide customers with a detailed schedule of fees and commissions for the entirety of a policy’s life cycle. Most of the leading advisory firms welcome these changes, therefore it is clear that the financial advisory industry in the GCC countries is changing for the better, although there is some way to go still”.
Paul Evans, Head of Middle East at Old Mutual International, added, “The MEIP is a fascinating insight into the state of the financial advice sector in the GCC, and we were delighted to be an integral part of it. It is clear that financial advisers still play a vital role for expats, but more needs to be done in terms of transparency and regulation in order to increase the reputation of the industry further. It is also concerning that many individuals feel they are only able to save a small proportion of their salary. The retirement landscape is shifting in the region to bring savings policy more into line with worldwide trends, which is likely to place more responsibility on individual saving. High quality, trusted advice will be critical to help people plan accordingly.”
Since MEIP was written the Insurance Authority, which regulates insurance brokers, has introduced draft regulations which proposes a cap on commissions for lump sum investments and fixed-term contractual plans, and issue clear guidelines on the selling of insurance and investment products to safeguard the interest of customers.The measures include a cap of 4.5% on the sale of lump sum portfolio bonds or offshore bonds by advisers from financial companies. The draft also stipulates that advisers must provide customers with a detailed schedule of fees and commissions for the entirety of a policy’s life cycle and customers have the option to cancel a policy within 30 days.
21 financial services companies supported this project, including Old Mutual International, Morningstar and Financial Risk Solutions (FRS)
About Insight Discovery
Insight Discovery is a multiple award winning consultancy that specialises in strategic communications, market intelligence and event optimisation. We offer bespoke innovative solutions and a personalised service to companies operating in Emerging Markets, these include many of the world’s largest and best-known financial institutions.
We also manage projects for professional services companies, such as law firms and government agencies. We leverage a wide network of experienced content writers, digital marketers and designers to help our clients will all their communication, research and event management requirements. For five years running, Insight Discovery was voted ‘Best Consultancy Firm in The Middle East’ by Global Investor, part of Euromoney. Insight Discovery is behind the www.whichfinancialadviser.com, which helps expats find a qualified financial adviser from a regulated firm.
*Survey regarding reputation was conducted in partnership with YouGov during February 2019. All the data from the other questions was sourced by Insight Discovery
For media enquiries, please contact:
Nigel Sillitoe
CEO, Insight Discovery
Mobile: +97155 8809676
Email: sillitoe@insight-discovery.com
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