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MENA Investors More Likely Change Investment Behaviour Than Global Average; EY Wealth Report Reveals

Fifty-nine per cent of wealth management investors in the Middle East are planning to move their assets to a new provider in the next three years, more than the global average of 49 per cent. Professional services network EY revealed these findings and more about wealth management in the region in its latest report.

The ‘2023 EY Global Wealth Research Report‘ reveals that investment performance is a primary motivator; while Middle East wealth management providers feel the need to prioritise the enhancement of their digital capabilities and broaden their investment options.

As 81 per cent of millennials and 50 per cent of Gen X investors intend to move their assets before 2026, fintech, AI trading platforms and full-service institutions are the service providers most likely to benefit from the shift.

Nearly half of the surveyed clients perceive wealth management as becoming increasingly complex in the last two years. Within the MENA region, individuals with a high net worth and those investing through discretionary or execution-only mandates are finding wealth management harder to navigate. EY’s report explains that this perception can be partly attributed to the recent market volatility, mainly because of COVID-19, political tensions and interest rate instability.

Sarah Sanders, EY MENA wealth and asset management leader, discussed these findings: “The report found that 61 per cent of accomplished individuals in the Middle East are finding wealth management more complex, compared to 32 per cent globally. This is a significant difference that may indicate a lack of investment knowledge or financial preparedness among clients in the region.”

‘Higher emphasis on value from wealth advisors’

In the Middle East, 96 per cent of respondents also switched to a more defensive investment style – due to a decline in portfolio value in recent years, compared to 73 per cent of global investors. Furthermore, 47 per cent of MENA participants increased their allocation to savings or deposits over the past two years as a safety response.

Meanwhile, ESG has gained more traction: 58 per cent of participating investors are seeking content on related investments and product offerings from their advisors.

Sanders also commented on the investment trends seen across the globe in the EY report: “Clients across the globe, including those here in MENA, are placing a higher emphasis on value from wealth advisors. We know that in times of uncertainty and complexity, investors search not only for stability, defensive asset protection and sustainability through diversity but also for ever-greater value.

“Increased product deployment and education and a more thorough understanding of investors’ preferences, in addition to full transparency over fees, all have a role to play in delivering higher client satisfaction, trust and value in today’s world.”

‘Innovative collaboration tools to support hybrid model delivery’

Hamdan Khan, wealth and asset management consulting leader, MENA at EY, said: “Advisors in the MENA region should consider the use or enhancement of hybrid investment models to empower clients. Wealth managers face the real-world challenge of needing to guide investors through periods of global economic and geopolitical uncertainty. To help navigate these challenges effectively, they should use innovative collaboration tools to support their hybrid model delivery. By combining in-person advice with virtual interactions and self-service capabilities, they can meet the evolving demand for personalised engagement. Wealth managers should consider three key strategies.

“The first of the strategies involves empowering clients through personalised and tailored engagement, focused through every stage of the wealth management journey. The second entails the provision of frequent and flexible interactions with advisors using enhanced multi-channel models and digital collaboration tools, while the third targets improvement in client satisfaction and empowerment through interactive platforms and easy access to expert guidance.”

Author

  • Tom joined The Fintech Times in 2022 as part of the operations team; later joining the editorial team as a journalist.

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