|13 January, 2020

Top trends: Only 23% of Mideast investors want to change wealth managers: EY

In the Middle East, 75% of clients move their money when starting a new business

Image used for illustrative purpose. Display stock numbers and shanghai skyline background.

Image used for illustrative purpose. Display stock numbers and shanghai skyline background.

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Investors in the Middle East have shown little interest in moving assets, with only 23 percent of them looking to change wealth managers in the next three years, EY said in a report.

By comparison, three years ago, investors had moved 50 percent of their assets.

Globally, 32 percent moved their assets in the past three years, while another 32 percent plan to do so over the next three years as sentiment remained consistent.

“The wealth asset management research conducted by EY does indicate that the movement of assets in the Middle East will slow down in the upcoming years, but there is still a strong opportunity for wealth management firms to attract assets among the Middle East client base. Clients are willing to pay for financial advice, but what they value is evolving rapidly,” Sarah Sanders, MENA Wealth and Asset Management Leader, EY said.

“Wealth management firms need to better understand when their clients would consider moving their assets, the reasons for doing so, and the qualities they are weighing up when selecting a new provider,” Sanders said.

EY said that clients are more likely to reevaluate and move their assets during major life events such as starting a business or buying a house.

In the Middle East, 75 percent of clients move their money when starting a new business, 73 percent make the shift when buying a house, and 60 percent of clients reconsider their asset management when inheriting or receiving money.

Clients are likely to switch wealth asset management providers for one of these six reasons: Quality and reputation, products, advisory capabilities, personal attention, pricing, or technology.

EY’s survey also shows that Middle East clients will use over four different types of wealth providers at the same time to meet different financial needs such as family security, real estate, retirement funds, and university fees.

“Wealth management clients in the region are cautious and do not want to trust one provider with all of their assets. Instead, they tend to work with institutions that have a long history of success in more stable markets abroad,” Sanders said.

“Clients that do consider investing their assets in the region are often curious to see how the local market might develop. There is therefore a great opportunity for wealth asset providers in the region to cultivate relationships with these clients and build trust over time, ultimately leading to an increase in the number of assets invested in the Middle East,” she added.

According to the survey, 46 percent of clients highly value simple, intuitive digital processes for their investment activities while 25 percent currently receive financial advice through mobile apps.

“As clients redirect their asset management towards alternative business models, the demand for digital solutions that offer 24x7 anytime, anywhere access on any device is on the rise – in fact, 20 percent of clients in the Middle East say that they would switch wealth asset management firms today for such a service,” Sanders said.

“In addition, there is a fast-growing preference among clients to use mobile apps not only for executing transactions but for opening accounts, monitoring results, rebalancing their portfolio, and learning about products and services. The future success of wealth management firms in the Middle East, in an increasingly high-tech sector, will be determined by their ability to keep up with the pace of change and reconfigure their digital delivery model to meet these expectations,” she concluded.

(Writing by Gerard Aoun; editing by Seban Scaria)

(gerard.aoun@refinitiv.com)

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