The global economic slowdown and the shrinking fortunes of rich clients have shaken the wealth management industry to its core since the 2008 financial crisis.
Reflecting the uncertain outlook for the industry across the region and worldwide, Swiss Life International last month became the latest big player to announce it was withdrawing from the Dubai market.
Yet amid the gloom, financial services firms are looking at new opportunities within the GCC. Already HSBC and Barclays, two international banking giants, are bolstering their presence in the region in a bid to manage more cash from wealthy investors.
The National spoke separately to Francesca McDonagh, the Middle East and North Africa head of retail banking and wealth management at HSBC, and Rory Gilbert, the managing director and head of Middle East and North Africa for wealth and investment management at Barclays, about the challenges ahead.
As a bank how are you putting more focus on wealth management in this region?
Ms McDonagh Historically, wealth management has been a relatively small part of our business but that has changed. We have seen a lot of growth in the past 12 months coming from our wealth business. We have invested in our people so we now have over 160 HSBC Premier wealth accredited relationship managers in the region, the majority of whom are in the UAE. We recently launched discretionary management services, whereby a customer with at least $1m who doesn't have the desire, knowledge or time to invest their portfolio actively can give a discretionary mandate to HSBC asset management to manage their portfolio directly.
Mr Gilbert We've reinvigorated, reshaped and rebooted in the way we're approaching Mena [Middle East and North Africa region]. I took over this business 15 months ago and one of the observations I had was that we needed to be a bit more vigorous in the way we bring the whole range of offerings to the region. We're growing at double-digit rates in revenue and asset value terms and will continue to hire as the rate of the business supports taking on more people. We feel very strongly our commitment to the region is best understood by our investment in the region. We're building out a presence in each of the markets we work in and will keep doing that. We have hired a lot of people over the last 12 to 18 months and the challenge now is to understand how we bed them down and help them understand how to maximise the value they bring to their clients.
Who are your clients here?
Ms McDonagh In the UAE, we have quite significant sectors, so we have Emiratis and pan-Arab nationals, a very large base of western expats and a significant segment around non-resident Indians. We will see the western expat base grow through the acquisition of Lloyds Banking Group's business in the UAE. Lloyds' base in the UAE is approximately 7,000 customers who are typically expatriate with mass affluence. They will become an increasingly important part of our business in the Emirates.
Mr Gilbert We deal with a massive range of people, background and skills. We deal with nationals from the region but, as you know, there are very significant businesses and families that have been built by people who aren't from the area over many years. We enjoy working with people whether they're of Indian origin, western European origin or Emirati because it gives us an opportunity to lean about those clients and the grouping they come from. One thing I particularly enjoy about this region is that our clients are very investment savvy.
What sort of interest are you seeing from clients?
Ms McDonagh It varies. We see customers in the Middle East have an appetite for bonds, such as fixed income, government or corporate bonds. The low-interest rate environment and their low risk mean customers have preference for this.
Mr Gilbert What clients are looking for now is yield. In an environment where effectively interest rates are zero, it's very hard for clients to preserve their purchasing power without taking on some incremental risk. We're very keen on high-yield equities and high-yield bonds, and were very early on this call. We think clients need to look into areas they would not always have been comfortable to generate risk to achieve the yields they want.
Have you noticed any interesting investment trends since the global financial crisis in 2008 and the Arab Spring?
Ms McDonagh Some people have found it very hard to react and to know what information to use when they're going through the full cycle of an investment. We see that customers are increasingly looking to get trusted advice about their wealth management needs as opposed to just looking at the next hot product in the market.
There's been regional uncertainty, both politically and economically, but the euro crisis and global economic challenges have resulted in some of our customers in this part of the world looking to emerging markets, and to the Middle East for wealth solutions. Our businesses in more developed markets are a very important part of what HSBC does globally, but we do see the future growth coming increasingly from emerging markets.
Mr Gilbert One of the interesting things after the crisis was that clients who thought they were very tolerant of risk discovered it appearing in places that weren't anticipated. Consequently, they've become very risk-averse across a whole range of things. Our job is difficult as quite often clients prefer to deal with things they think they understand, but they unwittingly expose themselves to a lot more risk. For example, real estate.A lot of people think of real estate as a terrific, tangible investment but you can see that in this region and elsewhere, real estate, particularly when you add leverage, can get you into a situation that's very difficult to manage quite quickly.
The Arab Spring has boosted the UAE's status as a haven for investors in the region. Do you see any evidence of such a trend in wealth management?
Ms McDonagh When there has been political uncertainty in parts of Mena we have seen some customers look to have savings or deposits in the UAE. Typically, when they do that they go to a brand they recognise and trust and among our customer base we do have pan-Arab nationals and GCC nationals who want to have savings, investment or some deposit in the UAE. We also see a lot of people coming here to work, to invest, to educate or to have their family.
Mr Gilbert It's difficult to link cause and affect. But we have been really impressed by the way in which the UAE has flourished in the last few years. I'm aware anecdotally of a large number of people and families that have relocated their businesses because they see the UAE as somewhere that's stable, safe, governed extremely well, has a high level of transparency level. [There is] confidence about the future. To some extent, that sets it apart from other areas in the region, where there hasn't been that stability in the past few years, but it's difficult to draw conclusions that are definitive.
tarnold@thenational.ae
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Name: Brendalle Belaza
From: Crossing Rubber, Philippines
Arrived in the UAE: 2007
Favourite place in Abu Dhabi: NYUAD campus
Favourite photography style: Street photography
Favourite book: Harry Potter
COMPANY%20PROFILE
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The Perfect Couple
Starring: Nicole Kidman, Liev Schreiber, Jack Reynor
Creator: Jenna Lamia
Rating: 3/5
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
Greatest of All Time
Starring: Vijay, Sneha, Prashanth, Prabhu Deva, Mohan
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Iftar programme at the Sheikh Mohammed Centre for Cultural Understanding
Established in 1998, the Sheikh Mohammed Centre for Cultural Understanding was created with a vision to teach residents about the traditions and customs of the UAE. Its motto is ‘open doors, open minds’. All year-round, visitors can sign up for a traditional Emirati breakfast, lunch or dinner meal, as well as a range of walking tours, including ones to sites such as the Jumeirah Mosque or Al Fahidi Historical Neighbourhood.
Every year during Ramadan, an iftar programme is rolled out. This allows guests to break their fast with the centre’s presenters, visit a nearby mosque and observe their guides while they pray. These events last for about two hours and are open to the public, or can be booked for a private event.
Until the end of Ramadan, the iftar events take place from 7pm until 9pm, from Saturday to Thursday. Advanced booking is required.
For more details, email openminds@cultures.ae or visit www.cultures.ae
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Tips for newlyweds to better manage finances
All couples are unique and have to create a financial blueprint that is most suitable for their relationship, says Vijay Valecha, chief investment officer at Century Financial. He offers his top five tips for couples to better manage their finances.
Discuss your assets and debts: When married, it’s important to understand each other’s personal financial situation. It’s necessary to know upfront what each party brings to the table, as debts and assets affect spending habits and joint loan qualifications. Discussing all aspects of their finances as a couple prevents anyone from being blindsided later.
Decide on the financial/saving goals: Spouses should independently list their top goals and share their lists with one another to shape a joint plan. Writing down clear goals will help them determine how much to save each month, how much to put aside for short-term goals, and how they will reach their long-term financial goals.
Set a budget: A budget can keep the couple be mindful of their income and expenses. With a monthly budget, couples will know exactly how much they can spend in a category each month, how much they have to work with and what spending areas need to be evaluated.
Decide who manages what: When it comes to handling finances, it’s a good idea to decide who manages what. For example, one person might take on the day-to-day bills, while the other tackles long-term investments and retirement plans.
Money date nights: Talking about money should be a healthy, ongoing conversation and couples should not wait for something to go wrong. They should set time aside every month to talk about future financial decisions and see the progress they’ve made together towards accomplishing their goals.
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Going grey? A stylist's advice
If you’re going to go grey, a great style, well-cared for hair (in a sleek, classy style, like a bob), and a young spirit and attitude go a long way, says Maria Dowling, founder of the Maria Dowling Salon in Dubai.
It’s easier to go grey from a lighter colour, so you may want to do that first. And this is the time to try a shorter style, she advises. Then a stylist can introduce highlights, start lightening up the roots, and let it fade out. Once it’s entirely grey, a purple shampoo will prevent yellowing.
“Get professional help – there’s no other way to go around it,” she says. “And don’t just let it grow out because that looks really bad. Put effort into it: properly condition, straighten, get regular trims, make sure it’s glossy.”
Sheikh Zayed's poem
When it is unveiled at Abu Dhabi Art, the Standing Tall exhibition will appear as an interplay of poetry and art. The 100 scarves are 100 fragments surrounding five, figurative, female sculptures, and both sculptures and scarves are hand-embroidered by a group of refugee women artisans, who used the Palestinian cross-stitch embroidery art of tatreez. Fragments of Sheikh Zayed’s poem Your Love is Ruling My Heart, written in Arabic as a love poem to his nation, are embroidered onto both the sculptures and the scarves. Here is the English translation.
Your love is ruling over my heart
Your love is ruling over my heart, even a mountain can’t bear all of it
Woe for my heart of such a love, if it befell it and made it its home
You came on me like a gleaming sun, you are the cure for my soul of its sickness
Be lenient on me, oh tender one, and have mercy on who because of you is in ruins
You are like the Ajeed Al-reem [leader of the gazelle herd] for my country, the source of all of its knowledge
You waddle even when you stand still, with feet white like the blooming of the dates of the palm
Oh, who wishes to deprive me of sleep, the night has ended and I still have not seen you
You are the cure for my sickness and my support, you dried my throat up let me go and damp it
Help me, oh children of mine, for in his love my life will pass me by.
Israel Palestine on Swedish TV 1958-1989
Director: Goran Hugo Olsson
Rating: 5/5
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COMPANY%20PROFILE
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BEETLEJUICE BEETLEJUICE
Starring: Winona Ryder, Michael Keaton, Jenny Ortega
Director: Tim Burton
Rating: 3/5
Simran
Director Hansal Mehta
Stars: Kangana Ranaut, Soham Shah, Esha Tiwari Pandey
Three stars
If you go
The flights
Emirates flies from Dubai to Funchal via Lisbon, with a connecting flight with Air Portugal. Economy class returns cost from Dh3,845 return including taxes.
The trip
The WalkMe app can be downloaded from the usual sources. If you don’t fancy doing the trip yourself, then Explore offers an eight-day levada trails tour from Dh3,050, not including flights.
The hotel
There isn’t another hotel anywhere in Madeira that matches the history and luxury of the Belmond Reid's Palace in Funchal. Doubles from Dh1,400 per night including taxes.
Results
2pm: Maiden (PA) Dh 40,000 (Dirt) 1,200m, Winner: AF Thayer, Tadhg O’Shea (jockey), Ernst Oertel (trainer).
2.30pm: Maiden (PA) Dh 40,000 (D) 1,200m, Winner: AF Sahwa, Nathan Crosse, Mohamed Ramadan.
3pm: Handicap (PA) Dh 40,000 (D) 1,000m, Winner: AF Thobor, Szczepan Mazur, Ernst Oertel.
3.30pm: Handicap (PA) Dh 40,000 (D) 2,000m, Winner: AF Mezmar, Szczepan Mazur, Ernst Oertel.
4pm: Sheikh Hamdan bin Rashid Al Maktoum Cup presented by Longines (TB) Dh 200,000 (D) 1,700m, Winner: Galvanize, Nathan Cross, Doug Watson.
4.30pm: Handicap (PA) Dh 40,000 (D) 1,700m, Winner: Ajaj, Bernardo Pinheiro, Mohamed Daggash.
Our legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
India team for Sri Lanka series
Test squad: Rohit Sharma (captain), Priyank Panchal, Mayank Agarwal, Virat Kohli, Shreyas Iyer, Hanuma Vihari, Shubhman Gill, Rishabh Pant (wk), KS Bharath (wk), Ravindra Jadeja, Jayant Yadav, Ravichandran Ashwin, Kuldeep Yadav, Sourabh Kumar, Mohammed Siraj, Umesh Yadav, Mohammed Shami, Jasprit Bumrah.
T20 squad: Rohit Sharma (captain), Ruturaj Gaikwad, Shreyas Iyer, Surya Kumar Yadav, Sanju Samson, Ishan Kishan (wk), Venkatesh Iyer, Deepak Chahar, Deepak Hooda, Ravindra Jadeja, Yuzvendra Chahal, Ravi Bishnoi, Kuldeep Yadav, Mohammed Siraj, Bhuvneshwar Kumar, Harshal Patel, Jasprit Bumrah, Avesh Khan
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The specs
Engine: Long-range single or dual motor with 200kW or 400kW battery
Transmission: Single-speed automatic
Max touring range: 620km / 590km
Price: From Dh250,000 (estimated)