The changing landscape of investment advisory across UAE and GCC

In recent years, there has been a rapid shift in the investment advisory landscape across the UAE and the GCC.

This change has been brought about by a range of factors predominantly underscored by an increased focus on client-centricity to meet the evolving needs of institutional investors.

Key developments such as localisation of solutions, internationalisation of portfolios and ultimately, an increasing sophistication and understanding within the investment community of the need to think global and invest across a range of asset classes to mitigate risk.

As we emerge from the shadow of the Covid-19 pandemic, it is staggering to note that total global wealth grew by 7.4 per cent in 2020 according to Credit Suisse Research Institute’s 2021 Global Wealth Report, despite the challenging economic conditions caused by the pandemic.

In the face of such volatility the UAE and GCC remained resilient, however, the economic uncertainty brought about by the pandemic caused a shift in investors attitudes with an increased understanding of, and desire to, diversify portfolios and overhaul their investment advisory strategies in a significant way. It is fair to say that we are currently at an inflection point within the investment advisory landscape and industry professionals must swiftly adapt to embrace such changing institutional investor perspectives in order to continue to build trust and grow.

A key area of focus now for wealth managers seeking to provide client-oriented solutions is that of localisation. Clients are increasingly seeking the advice of local and regional asset managers who possess a rich knowledge of local and regional market dynamics. Through developing tailored products, services and solutions that meet the requirements of UAE and GCC-based institutional investors, wealth managers can continue to evolve and support their clients in future-proofing their investment advisory strategies. Furthermore, for clients – and indeed the region as a whole – areas such as sustainable investing are increasing in importance, resulting in a need for these to be included in localised product offerings and advisory services.

This localisation must be underpinned by global capabilities to enable investor confidence in their chosen wealth manager to flourish. Given the pandemic-induced volatility on a global scale, and key developments such as a lower oil price environment and increased fiscal consolidation from GCC governments, now more than ever, institutional investors have a clear desire to diversify portfolios on a geographic scale and across asset classes to mitigate risk.

The changing operating environment, coupled with critical issues such as decarbonisation has undoubtedly created macroeconomic headwinds within the Middle East. The result is the demand for a broader range of investments on an international scale, and institutional investors are increasingly seeking solutions that consider robust environmental, social and governance factors. Local and regional wealth managers truly need to have a strong understanding of the global landscape to continue to meet the needs of their clients.

Moreover, there is unarguably a rising sophistication among investors; they have an increased knowledge of the opportunities available and demand greater levels of advice and insights from those tasked with managing their hard-earned money. Institutional investors are increasingly looking to expand portfolios across emerging and developed markets on a global scale, and across a range of asset classes such as private equity and equities and debt markets to provide a diversified approach.

2022 on a global scale will be a year of reshaping as global economies focus on realignment and enhancing built-in resilience and future-proofing their strategies.

Within the GCC, we are at the precipice of a fundamental shift in how wealth managers and their institutional clients work together. The focus moving forward must be on local capabilities and global consultation to meet their needs of a diversified portfolio that capable of withstanding headwinds. It is through this consultative, partnership approach that wealth managers can build trust and provide investor confidence.

Yaser AbuShaban is a senior investment consultant at Mercer