Arrived here safely five years ago. Climate usually very pleasant, but weather at present as bad as ...
Arrived here safely five years ago. Climate usually very pleasant, but weather at present as bad as you're getting at home. No plans to cut short my visit, though.
One of the obvious attractions to Dubai while the credit squeeze took shape has been the opportunity to contest a GCC pool of $2trn of investable assets, spread across sovereign investors, high net worth individuals, and an increasing mass affluent sector.
Whilst mature market sentiment in the West worsened, the dynamism of the international investor based in the Middle East has represented an exciting new opportunity for the global asset management industry.
This is still very much the case, but it's essential to view this through the lens of an objective to build a sustainable, profitable and long-term business in what will become one of the key global regions over the next generation.
While many view the confluence of leverage, market downturns, banking turmoil and a developing level of investor understanding as the conditions of the perfect storm, there is a real opportunity for those who steer their way towards an environment of well-educated investors, advised by long-standing relationship managers, within a highly intersected value chain provided for by groups where investment expertise lies at the heart of their business.
We are currently seeing a shift in the dynamics of distribution, where a three-cornered relationship between fund management groups, product providers such as life companies, and bancassurance distributors is developing.
Fund groups who develop a dialogue with their distributors that is generic, practical and helpful and is a sharing of their experience when times have been tough before, should succeed over those who have traditionally had a more transactional approach.
We are currently seeing guaranteed products coming to grief because of the counterparty risk, and I would argue that however good the advice given to the client, there is a significant risk to the adviser-client relationship. We would expect the emphasis to move to the mutual fund arena once again.
There are good and bad performers, but it is easier for the expectations of the client to be met with these less complicated vehicles. Product packaging has traditionally been a strength of the life industry, so we could see its firepower being further deployed in the region.
When we came to the Middle East, we looked for a robust regulatory environment to reduce our business risks.
We found this in the Dubai International Financial Centre (DIFC), which provides us with the benefits of UK-type financial regulation, as well as a hub to grow our business across the Middle East.
The opportunity for the centre to take a lead in providing investor education and a level playing field for products within the advisory environment, represents a way to move even more quickly to calmer waters.
What we are seeing is certainly likely to be a shake-out, but the fundamental attractions of the region remain, perhaps more tempered with reality. Still a very good long-term forecast.
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