Distinguishing Features

Describing where GCC countries distinguish themselves in wealth creation, how digital solutions increase options, and the demand for talent, Ali Janoudi Head of Wealth Management Middle East & Africa at UBS Global Wealth Management talks with MEA Finance about wealth and investment services in the Middle East

What is driving the growth of wealth management and investment services in the GCC and the Middle East?

Like in any other part of the world, the demand for wealth management services and investment advice is correlated with the creation of new wealth. Where GCC countries differ, is that this wealth creation has been more accentuated over the past decade than elsewhere. And this trend will continue in the near future, supported by energy prices leading to a projected GDP growth for the GCC countries of 5.9% in 2022 vs 2.6% for the world economies.

Over that same period, we have seen an emergence of entrepreneurs, some in new world economies, in line with the governments’ stated program to diversify the region away from fossil energies. It is worth noting that the amount of startup funding in Saudi Arabia for the whole year of 2016 was surpassed every month in 2021, and that the number of IPO applications on the Saudi bourse have doubled to date compared to last year. Qatar noteworthily innovated in 2021 through several transactions on the newly created Qatar Equities Venture Market develop an unparalleled offering, reflecting the views of our Chief Investment Office, whose thought leadership comes from 200 investments specialists around the world in 11 key financial hubs.

Ali Janoudi Head of Wealth Management Middle East & Africa at UBS Global Wealth Management

enabling a direct listing method, without an IPO process prior to listing.

The demand for wealth management services has also grown in parallel with local investors becoming more global in their thinking, as well as more demanding with respect to the solutions required for their individual needs. UBS’s scale is a major advantage here, as it enables us to

How can private banking, wealth management and investment be successfully transitioned to a platform-based service and retain its bespoke appeal?

Digital is often understood as standardization. We believe that the key benefit of digital solutions is the convenience it brings in a very personalized way. At UBS, our vision is to convene the global ecosystem for investing where thought leadership is impactful, people and ideas are connected, and opportunities are brought to life. There are several initiatives underway to bring our vision to life, for example the recent acquisition of Wealthfront, an industry-leading, digital wealth management provider. Let me pick another one, Circle One, an app we recently launched in APAC before a global rollout which will include the Middle East.

UBS Circle One is a new digital platform that brings the best of UBS’ global ecosystem to clients. This leadingedge innovation connects clients to experts and thought leaders with tailored actionable ideas.

With this innovation, UBS will deliver research and solutions in an engaging and convenient way. Clients get new daily content based on the latest UBS CIO House Views through short videos, podcasts and interactive live webinars, complementing traditional investment reports and physical events. Clients will also be offered timely actionable ideas and investment opportunities at their fingertips, where they can then choose to invest or trade through our mobile banking app.

There will be new features added to the app regularly. In the next phase, clients will be able to connect with each other and to experts across the globe in “circles” of interest groups on topics they are passionate about from investing, wealth planning, family advisory to sustainability, art and philanthropy, among others.

More generally, we will give our clients the choice of how digital they would like our wealth management services to be, according to their personal preferences. And the choice is very broad, from digitally led advisory all the way to a service model where digital is combined with human interactions.

How are the values of upcoming generations of high-net-worth clients in the region influencing the ESG policies of your institution?

We want to be the financial provider of choice for clients who wish to mobilize capital towards the achievement of the UN Sustainable Development Goals (SDG) and the transition to a low-carbon economy. As a result, we made sustainable investing the preferred solution for our wealth management clients. In total, UBS manages USD 251 billion of sustainabilityfocused and impact investments.

We are a global leader in SI and in integrating ESG aspects into our investment processes, with a global footprint and a network of resources to deliver a wide range of research, advisory and product capabilities. We are gladly taking these steps because they are equivalent to what many institutional but also private investors consider a license to operate. We are also deeply convinced that embedding ESG aspects are essential to optimizing risk-adjusted returns in a world that is increasingly exposed to ESG trends. This happens to coincide with values of the younger generation. Many of our younger clients value the increasing integration of ESG aspects into investment decisions, and our priorities are naturally aligned to serve the needs of this generation.

For the Middle East, it is also relevant to highlight that sharia-friendly finance and SI share several similarities, yet the two approaches are rarely combined in practice. Sustainable and Sharia-friendly investing are a natural match, and an area that we address regularly with our clients. Both investment schools go beyond a pure economic or financial approach to investing by considering the impact a company or activity might have on society and the environment. Applying sustainable investing scores to a Sharia-friendly portfolio helps identifying companies that have a positive impact on society and the environment and enhances the performance of the overall portfolio on ESG metrics.

In terms of asset classes, how will the regional investment landscape will look for high-networth customers in five years from now?

We are fortunately witnessing very positive developments in the region, such as, Saudi Arabia’s Vision 2030 as a

pathway to the country’s future. Should these developments prove successful – which we are confident they will – this will meaningfully help increase the presence of regional assets in global investment portfolios. Moreover, a greater presence from global investors should help to boost liquidity in local stock and bond markets and allow for better, and likely cheaper, access to capital for local companies. Lastly, a successful transition toward an economic growth model that relies less on fossil fuels should also improve the sector diversification of local markets, making them more appealing for investors from a diversification, and hence, expected risk-adjusted returns perspective. In other words: the region’s markets will likely play a more crucial role in globally diversified portfolios.

For local GCC investors, the conclusion should not be to increase exposure to local markets, rather to continue focusing on achieving an optimal global diversification of their assets.

What are the current challenges in recruiting wealth and relationship managers and how are these roles changing?

The Middle East is home to several of the fastest growing financial centers. The DIFC for example achieved its 2024 strategic growth targets three years ahead, during the first half of 2021. The Centre attracted 996 company registrations last year, the highest ever recorded in a single year and a 36% increase from 2020.

As a result, the demand for talent coming from both international and local wealth managers has often exceeded the talent pool. One can truly speak of a “war for talent” whose logical consequence is to

push compensation levels to above market norms in the most established financial centers. And this phenomenon may be here to stay given that FDI in MEA was 10 % higher (during the COVID-19 period) vs a 33% decrease in the rest of the world.

Moreover, regulatory requirements are influencing the profile of the ideal wealth manager. Whilst the ability to develop a strong personal relationship with clients remains central, bankers must also combine strong technical expertise with irreproachable ethical behavioral. Their role has evolved accordingly.

In that challenging context, UBS has managed to consistently hire new talents in the region, doubling our local work force in Dubai over 5 years to 120 persons. We plan to reach a comparable level in our Qatar office in the course of next year.

MANY OF OUR YOUNGER CLIENTS VALUE THE INCREASING INTEGRATION OF ESG ASPECTS INTO INVESTMENT DECISIONS