Some 59% of wealth management investors in the Middle East are planning to move their assets to a new provider within the next three years, in comparison to 45% of global investors, according to the newly published EY 2023 Global Wealth Survey. The motivation lies in the desire to maximise returns as well as broaden the investment proposition.

Hamdan Khan, EY MENA Wealth and Asset Management Consulting Leader, says that although demand is for more choice, that the region is not homogeneous. “Interest in various investments varies across the Middle East and is based on the customer segment that wealth managers or private banks are focusing on. Countries like Kuwait are very much focused on funds, especially real estate funds, whereas in the United Arab Emirates (UAE), investors are looking more into international equities and portfolio diversification.”

“Investors across the Middle East region like to have access to the whole market where possible. It is important to consider that the proposition will differ between wealth management firms, depending on their individual capabilities and strategies. However, in the past two to three years, wealth management firms have, on the whole, widened their offerings to offer a whole of market approach and become a full-service provider.”

Indeed, as the wealth management landscape continues to evolve in the region, and advice on market trends and access to product specialists remain the key priorities for clients, a topic that has gained traction is ESG, with 58% seeking content on related investments and product offerings from their advisers.

Interestingly this drive to move and expand asset allocation is not generation specific. 81% of Millennials and 50% of Generation X investors intend to move their assets before 2026. The report says that the service providers most likely to benefit from the shift are FinTech firms, AI trading platforms and full-service institutions.

This is largely due to the fact that the region’s wealth managers have some catching up to do. Indeed, the Middle East market has not witnessed the same level of technology investment as the European and US markets, but this is gradually changing. The survey shows that clients in the Middle East currently have a comparatively lower level of engagement with digital platforms relative to global averages, and they have a stronger inclination towards face-to-face engagement.

However, the survey also indicates that this preference is evolving, with a greater emphasis being placed on the need for strong digital capabilities; most likely due to the need to find solutions to the ongoing disruptions and complexities of global markets.

“Investors are highlighting the need for strong digital investment capabilities providing greater self-service and access to a wide range of products. In addition, service models are evolving by enabling technologies where wealth managers and/or private banks can serve their clients through low-cost investment propositions under a model-based portfolio construct”, Khan comments.

This development is no bad thing. Another key finding from the survey, is that nearly half of the surveyed clients perceive wealth management as becoming increasingly complex in the last two years. Having the right tools to make life simpler and with fewer points of friction are going to be valuable.

In particular, within the Middle East region, Ultra-High-Net-Worth Individuals (UHNWIs) and those investing through discretionary or execution-only investment mandates are finding wealth management harder to manage and navigate. The perception of increased complexity can partially be attributed to the recent market volatility, mainly because of Covid-19, political tensions, and the consequent interest rate instability.

Khan comments: “Having a digital end-to-end trading cycle is becoming a ‘must have’ as more players digitise their operations and clients compare their wealth management provider not only with other market players, but also with other companies they have interactions with, where they already enjoy an enhanced customer experience.”

He says that creating a smooth, error and delay-free trading process is the first priority. “This helps wealth management firms not only serve clients better but also automate tasks, reduce errors and attract more clients. It also becomes more cost-effective and allows firms to expand their offerings to different segments (e.g., mass affluent) and still provide a differentiated service.”

He thinks that changes can be expected in the next two to three years, if not earlier. “New players are investigating the potential of the Middle East market while established players are changing their tactics around how to best serve clients and investing in technology.”

Read and download the full report here.