Influx of millionaires stokes UAE demand for private bankers

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• Wealth management sector is growing alongside Emirates’ population
• The new clients have a different investment philosophy, said one expert
• Sought-after private bankers are joining the seven-figure club too

An influx of affluent migrants is fuelling demand for wealth management services in the UAE, with some private bankers joining their clients in the seven-figure-salary club as competition for their expertise soars.

Andrew Amoils, head of research at Johannesburg-based analyst New World Wealth, told AGBI that the number of centi-millionaires – people with fortunes of more than $100 million – living in the UAE had surged in recent years.

Over the past decade, he said, the number had risen 70 percent “from 175 centi-millionaires in 2012 to 295 centi-millionaires in 2022″. He added that these wealthy migrants were mainly from India, Turkey, Egypt, Russia, Lebanon, UK, Saudi Arabia, Pakistan and Nigeria.

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The UAE is home to 92,600 high-net-worth individuals – HNWIs, or people with wealth of more than $1m – according to the Henley Global Citizens Report, which tracks worldwide private wealth trends. The Emirates is expected to record a net increase in HNWIs for 2022, Henley added.

This growth has been accompanied by rising demand for wealth management services, said Robert Ansari, head of investment and retirement for India, the Middle East, Turkey and Africa at professional services firm Mercer.

“This has not only come from the influx of foreign residents seeking ‘institutionalisation’ of their wealth, but equally from the generational wealth transfer we see amongst the regional family offices,” Ansari told AGBI.

“The demand is also driven by the array and complexity of assets that are available to investors who may want to understand what these assets are, through to investing in them and needing support in that journey.” 

Ashok Sardana, founder and managing director of Dubai financial services firm Continental Group, also pointed to the pivotal role played by “investment migration” in the UAE’s private banking industry. 

“At this juncture, a CAGR [compound annual growth rate] of around 15 percent is a par-for-the-course growth prediction for the UAE wealth services sector,” he said, adding that clients had become more sophisticated.

“The difference between the HNWIs of the past and the present boils down to one fundamental aspect: investment philosophy. HNWIs today are more geared toward holistic investing, goal-based wealth management and impact-led investments,” Sardana said.

Global and regional financial institutions are expanding their wealth management divisions in the UAE and around the Gulf.

British lender HSBC is boosting its private banking business in the UAE to cater to clients with wealth in excess of $2m.

“Opening a new branch of our private bank in the UAE adds an important location to HSBC’s global network of international wealth management hubs, giving the growing number of UAE-based millionaires more choice about where their assets are held,” said Abdulfattah Sharaf, CEO of HSBC UAE and head of international, HSBC Bank Middle East, in October.

Family offices – privately held companies that handle investment management and wealth management for a family – are also increasingly looking to expand into the Middle East.

Josef Stadler, executive vice chairman of UBS Global Wealth Management, who manages some of the bank’s wealthiest clients, said in July that family office investments in the Middle East would increase by at least 50 percent over the next decade.

The Swiss bank is expanding in the region too. In February last year UBS opened an office in Doha to handle asset and wealth management services, while in October it expanded its operation in Dubai, including a wealth desk to cover Kuwait and Oman.

Elsewhere, Kuwait Finance House launched a digital wealth management platform in Bahrain and Swiss private bank Julius Baer has opened an additional office in Doha.

In turn, recruiters for the private banking sector have witnessed increased activity in the UAE and wider Gulf, according to Gareth El Mettouri, associate director for the Middle East at recruitment firm Robert Half.

“We have witnessed several SME wealth management companies opening in DIFC [Dubai International Financial Centre] and recruiting in the areas of asset management and investment analysts,” he said.

El Mettouri added that growing competition for talent had led to some candidates being offered packages of over $1 million and “being lured to Saudi Arabia as the kingdom steps up its recruitment drive”.

Gonçalo Traquina, partner of management consulting in the financial services sector of KPMG Lower Gulf, said the UAE was “emerging as one of the leading destinations for wealth management and private banking globally.” He suggested that the growth on online services and operators had led to the development of a new sector in the region – wealthtech.

“Wealthtech players are pushing the boundaries in wealth management across most markets with their advanced client-facing capabilities, such as intuitive and comprehensive dashboards and intelligent portfolio recommendations available to investors and financial institutions,” Traquina wrote in a blog post.

“Another key aspect has been their development and strong application of internal solutions, such as data analytics and robo-adviser platforms.”

However, a survey of wealth management professionals conducted by Hubbis, an industry body based in Hong Kong, found that only 10 percent of respondents believed the UAE was already in a position to compete with more established wealth management markets in Asia and Europe.

In a study conducted ahead of a Hubbis forum held in Dubai in September, 76 percent of respondents said the sector was “progressing really well” and 85 percent said they were either very or quite encouraged by developments in the Gulf’s wealth management industry.