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October 28, 2013

Study: UAE financial advisory business is in full growth mode

Study: UAE financial advisory business is in full growth mode

UAE advisers are twice as likely as their global peers to balance client asset growth objectives with protection of capital, according to a study by Natixis Global Asset Management

The UAE financial adviser study, conducted by the Durable Portfolio Construction Research Centre of Natixis Global Asset Management (NGAM) concludes that the UAE is one of the strongest markets for advisers globally, with great potential for further growth if current challenges are successfully overcome.

Forty per cent of UAE advisers say their business is growing strongly, compared to thirteen per cent of advisers globally – a testament to their skills in forging strong client relationships, providing a high level of advice and making the right investment decisions. Overall, nearly three in four (72 per cent) UAE advisers are in a growth phase, according to the survey.

“The industry is clearly moving in the right direction, with the majority of advisers, both globally and in the UAE, reporting good levels of business growth,” said Moad Touhami, Head of Distribution, NGAM Middle East.
Globally, one of the biggest challenges advisers face is constructing portfolios that reduce risks and enhance returns simultaneously. Data shows that UAE advisers are twice more likely than their international peers to balance client asset growth with protection of capital, with seventy seven per cent of local advisers seeking specific investment strategies aimed at managing volatility.

“Asset management companies can play a critical role in meeting these challenges and contributing to the development of the financial advisory businesswith research, data and new investment techniques to help advisers construct better portfolios,” said Touhami.

NGAM has developed a new philosophy called Durable Portfolio Construction that replaces traditional portfolio construction with a new set of investment principles based on a more nuanced approach better suited to navigating today’s complex markets. Risk is made the central focus of portfolio construction, targeting a range of risk rather than a range of returns. Improved diversification seeks to help manage volatility and reduce correlations to help investors stay invested and meet their long-term goals.
“Our research shows that when it comes to making investment decisions, advisers are focused on risk, volatility and income – all essential to constructing more durable portfolios aimed at meeting client objectives in all market conditions,” commented Touhami.

Furthermore, the study identified key areas of focus and challenges that UAE based advisers say are critical in their day to day jobs.

UAE advisers spend a considerable amount of time explaining investment concepts to clients. This is the number one service proposition for thirty-seven per cent of UAE advisers, compared to only one in five advisers internationally (twenty-two per cent).

This counselling approach is not surprising considering the key educational role that advisers can play in their clients’ financial planning. In an earlier survey conducted by NGAM of individual investors globally and in the UAE, a staggering majority of eighty per cent of individual investors in the UAE say they do not have strong investment knowledge, with only twenty per cent confident of their knowledge and choices. Furthermore, only 35 per cent of UAE investors say they have a plan that will help them reach financial goals.

Added Touhami, “At NGAM we strongly believe in enhancing financial knowledge and are proud to be able to contribute to the development of the investment industry with data and research. When combined with our durable portfolio construction philosophy, NGAM works together with the advisory community to help educate clients on how to establish more durable portfolios that are better suited to the challenges of today’s modern markets.”

CPI Financial


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