Rory Gilbert, Managing Director and Head of Wealth and Investment Management, Barclays, Middle East and North Africa
High net worth individuals in the Middle East are more confident about the increasing speed of wealth creation than those in any other market, the latest report in the Barclays Wealth Insights series reveals. Over half (60%) of respondents in the Middle East agreed that wealth can be created faster today than in the past, in comparison to 43% in Europe and 31% in North America. Interestingly, over half (54%) of Middle Eastern respondents stated that personal investments have contributed largely to their overall wealth portfolio, compared to other sources of income such as inheritance at 49%.
Half (50%) of Middle East respondents stated that their level of wealth increased in the recent financial turmoil, substantiating that MENA HNWIs tend to have a more positive view of setbacks and are more persistence in overcoming adversity. This is in line with findings from the 16th Volume of Wealth Insights which found that 45% HNWIs in the Middle East agreed that the recent crisis has provided them with opportunities.
Launched today (17th June 2013) and based on a global survey of more than 2,000 HNWIs comprising entrepreneurs, business leaders and investors, the report titled: “Origins and Legacy: The Changing Order of Wealth Creation provides an in-depth study into how wealth is now being generated, spent and shared across the world. The report navigates the global landscape of wealth, examining how different cultures prepare for the future and consider their legacy through wealth and inheritance planning and philanthropy.
In the rapid growth economies of the Middle East, nearly three quarters (73%) of respondents have accumulated the majority of their wealth in less than 20 years. In terms of how this wealth is used, HNWIs in the Middle East have a tendency to allocate more of their resources to personal property than to tangible assets and collectibles. On average, respondents in the region currently hold their wealth largely in personal property (30% of wealth), followed by investments (23%) and cash savings (20%). By contrast, just 13% of wealth is held in tangible assets.
From source to legacy:
As wealth rises and fortunes are made at a more rapid rate than ever before, the report explores how the challenges facing newly wealthy individuals - and families that need to plan for the future - have become more acute.
Many HNWIs around the world now prefer to give their money to family and friends and charitable causes in their lifetime rather than as inheritance, seeing their wealth as an ‘enabler’, the report revealed. This trend is especially prevalent in the Middle East with 19% of HNWIs planning to give their entire wealth away to family, friends and charity during their lifetime, compared to just 5% in the UK and 4% in the US. Across the Middle East, 96% of respondents indicated their intention to pass on some or all of their wealth to family or friends, either during their lifetime or as inheritance.
Rory Gilbert, Managing Director and Head of Wealth and Investment Management, Barclays, Middle East and North Africa, said, “Wealth creators in newer growth markets, profoundly see their money as an enabler for their family and to the wider wealth cycle. They want to pass their wealth down and leave their business as a legacy for future generations. The report reveals that wealthy families in the Middle East have a strong entrepreneurial spirit and want to play an active role in managing their money, and have great confidence in the future of the region.”
Impact on philanthropy:
In addition to the legacy left behind, the report finds that the changing origin of wealth has a profound impact on the motivations for global HNWIs to become involved in philanthropy. In the Middle East, HNWIs tend to give to charitable causes out of a sense of duty and responsibility (65%) as well as religious beliefs (60%). The former is echoed in other markets, with this being the case for 69% of respondents in the UK and Switzerland, 71% in the US and 84% in Monaco.
He further added: “We expect significant growth in family offices to occur in MENA, as HNWIs in the region that have gained their wealth over the last few decades look to come up with ways to pass it on to the next generation. Entrepreneurial activity still drives the vast majority of wealth creation in MENA, which is earned through the success and growth of business ventures. Even when MENA HNWIs received a large portion of their wealth from inheritance, they are actively involved in growing that financial legacy. In this respect, Middle Eastern HNWIs are the most optimistic among all the regions surveyed, and believe that wealth creation is easier at present than ever before. Not only is the Middle East the hotbed for creating wealth, but is also attracting global HNWI investments, that are seeking stable growth opportunities.”