A wealth of change

Legislative overhauls, adapting to overcome the pandemic, advancement in digital solutions and shifting production and consumption of investment content are among some of the influences that are changing wealth management in the region. Sherif ElHaddad, Executive Director, Asset Management at Al Mal Capital takes time with MEA Finance to provide an overview of the current wealth and portfolio management environment.

COVID-19 has proved that digital is no longer an option. How quickly do Wealth Managers in the Middle East and Africa need to adapt to this new digital-first reality?

Wealth managers and investment professionals in Middle East and Africa, much like the rest of the world, have adapted to and begun to overcome the pandemic. From a business continuity standpoint, a big part of that adaptation was helped by the advancement of digital solutions. By nature of the business, which includes investing in different jurisdictions, meeting management teams and interacting with other market participants is of utmost importance. The development of web-based meeting platforms ensured the ability of fund managers to retain an open dialogue with corporates in order to continue to make informed decisions. Investment committee meetings also see a degree of higher reliance on digital elements, such as digital presentations, pitch books, and investment theses, while also dialing in team members from around the world while sharing screens. With this also

Sherif ElHaddad, Executive Director, Asset Management

comes greater efficiency, as less time is wasted on the road or in an airplane, combined with lower travelling costs that can be re-appropriated elsewhere within the organization. Nevertheless, higher reliance on digital elements do not come without caveats. It is proving a tad more difficult to build rapport with new faces and open new doors. This tends to make individuals more inclined to remain within their existing network as opposed to winning new business, which can pose a hurdle to AUM growth.

As the more digitally native gain wealth and move into more prominent positions in their business and families, what are you doing to keep them engaged with your products and services?

We have seen a very discernible shift in the way investment content is produced and consumed. Slide decks and white papers are increasingly becoming a thing of the past and there is a clear demand for bite size, interactive, and informative content. We are leveraging social media platforms to engage with our client base, and open new doors with a wider audience, creating appeal for our products and services. At Al Mal we are fully embracing the new digital age by using online investment platforms to allow investors from around the world to access key feature details of our products and services in a stream-lined format, as opposed to relying on extensive documentation processes.

For investment strategies, what are the leading concerns of HNWI’s in the region at this time?

The region’s main market Saudi Arabia has had a strong run so far, largely bolstered by oil prices. As ESG concerns continue to proliferate across the world, especially as investors embrace negative screening tests on investable companies, appetite for environmentally friendly stocks rise, while that for those that are commoditybased declines. However, we see more concern in the fixed income space as federal reserve uncertainty coupled with streams of macroeconomic data implying an overheating economy is forcing investors to take stock and reassess their allocation. We remain constructive on equities in the medium term, as we see an earlier than expected transition to a hawkish fed. Furthermore, the stellar performance of technology names, particularly in mature markets during the pandemic, has not gone

unnoticed, and as the world continues to embrace technology, investors continue to allocate sizeable portions of their portfolio to tech-based companies. Naturally, given the region’s comparably thin bucket of investable tech-based companies, investors are finding it more difficult to justify allocation towards the region. HOWEVER, WE SEE MORE CONCERN IN THE FIXED INCOME SPACE AS FEDERAL RESERVE UNCERTAINTY COUPLED WITH STREAMS OF MACROECONOMIC DATA IMPLYING AN OVERHEATING ECONOMY IS FORCING INVESTORS TO TAKE STOCK AND REASSESS THEIR ALLOCATION.

How are regional jurisdictions developing in terms of succession planning and inheritance?

There has been a regional legislative overhaul as countries modernise their legal systems in order to meet the demands of today’s society. Nowhere is this more pertinent than the UAE itself, where the government has very astutely used legislative overhauls as a means to grow the expat population. Late last year the UAE government announced new legislation for inheritance through which foreign residents could apply laws of their own country to deal with their personal estate. Prior to the change, the Sharia law of Inheritance was applied to these expatriates’ estates unless specified legally. With aspirations to double population growth in Dubai, we remain constructive on the UAE to attract new talent and bolster its population base going forward.

With the current growth in the market, how challenging is it to source and retain experienced wealth managers and relationship managers in the region?

Attracting and keeping talent has always been a challenge in the region and in this industry, however we have been successful in building out our team with experienced relationship and portfolio managers, and this is a testament of our meritocratic system. We offer a dynamic work environment where everyone is on an exponential learning curve, growing in terms of responsibility and remuneration. We promote open dialogues between team members to help transfer knowledge around, while maintaining a transparent structure.