Recruitment companies (24 per cent) and credit card firms (18 per cent) topped a list of entities having the worst reputations in the UAE, said the ninth edition of the Middle East Investment Panorama (MEIP) released by leading consultancy Insight Discovery.
They are followed by Loan agents (18 per cent); Call centres (12 per cent); Real estate agents (11 per cent); Advisers from banks (6 per cent); Independent financial advisers (5 per cent); All others (5 per cent) as having the worst reputations in the UAE, said the MEIP, a comprehensive annual report on financial advice landscape in the GCC. For the first time ever it included interviews with 1,000 UAE residents.
In general, advisers fared well - or at least (far) less badly - than the other seven groups who were considered, the survey said.
The survey respondents were more likely to see independent financial advisers as having the worst reputation if those respondents were: single rather than married (with 6 per cent versus 3 per cent of people respectively); Emirati rather than expat (6 per cent versus 5 per cent); in Abu Dhabi (with 6 per cent) rather than Dubai(5 per cent) or Sharjah (3 per cent each); and aged 25-29 (7 per cent) rather than 35 years and over (4 per cent).
The independent financial advisers are viewed poorly by people who are earning between Dh65,001 and Dh70,000 ($17,711 and $19,073) per month. No fewer than 29 per cent of the respondents in this group said that the advisers had the worst reputation in the UAE.
The nationalities of the advisers match those of the (wealthier) expats whom they serve. The number of financial advisers working in the sector has shrunk dramatically, with many viewing the arrival of new firms as a major threat.
Forty-nine per cent of UAE residents only able to save 5 per cent or less of their monthly income, the survey said.
Research showed that UAE residents believe there are three major ways in which the image of advisers could be improved further: more transparency on fees and commissions (sought by 39 per cent of expats); a tougher stance by local regulators in relation to scams and unregulated firms (37 per cent); and industry-recognised qualifications for advisers (15 per cent).
As for the advisers themselves, the MEIP research found that many perceive competition from other advisers as a threat, with some seeing their business contract so much that they have had to move outside of the region.
A number of advisory firms have decreased their total number of advisers – although a couple of well-known firms have attracted new advisers. At one extreme, a firm surveyed reported that the number of advisers it employs had fallen from 40 in January 2018 to just five in January 2019; but at the other extreme, one firm increased the number of advisers it is employing from 10 to 25.
Nigel Sillitoe, chief executive officer (CEO) of Insight Discovery said, “Our survey amongst UAE residents proves that financial advisers have been working in a challenging environment, which explains why there are fewer advisers working in the UAE.”
“One exciting development, which will help advisory firms who want their perception to improve, is that the demand from UAE residents for more transparency will soon be addressed as the Insurance Authority, which regulates insurance brokers, has introduced draft regulations which proposes a cap on commissions for lump sum investments and fixed-term contractual plans.
“The draft also issues clear guidelines on the selling of insurance and investment products to safeguard the interest of customers and stipulates that advisers must provide customers with a detailed schedule of fees and commissions for the entirety of a policy’s life cycle. Most of the leading advisory firms welcome these changes, therefore it is clear that the financial advisory industry in the GCC countries is changing for the better, although there is some way to go still,” he added.
Paul Evans, head of Middle East at Old Mutual International, said: “The MEIP is a fascinating insight into the state of the financial advice sector in the GCC, and we were delighted to be an integral part of it. It is clear that financial advisers still play a vital role for expats, but more needs to be done in terms of transparency and regulation in order to increase the reputation of the industry further.
“It is also concerning that many individuals feel they are only able to save a small proportion of their salary. The retirement landscape is shifting in the region to bring savings policy more into line with worldwide trends, which is likely to place more responsibility on individual saving. High quality, trusted advice will be critical to help people plan accordingly.”
Insight Discovery is a multiple award winning consultancy that specialises in strategic communications, market intelligence and event optimisation, offering bespoke innovative solutions and a personalised service to companies operating in Emerging Markets.
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