Insight Discovery report spots life company opportunities in GCC
There are huge opportunities for life companies throughout the Middle East, particularly the Gulf Cooperation Council countries, a report by Insight Discovery says.
The 2012 Middle East Investment Panorama (MEIP) report by strategic research consultancy Insight Discovery noted that rapid economic growth in the GCC economies is leading to a greater concentration of wealth accumulation.
“Much of these savings are in the hands of expatriates, as they form the majority of the GCC workforce,” the report said.
Financial advisers are seen as a vital link between savers and life companies, whose roles have become more important as distributors of funds managed by international asset managers.”
Insight Discovery CEO Nigel Sillitoe said there are clearly more opportunities than challenges for international life insurance and asset management companies to do business with financial advisers across the GCC.
“With ever increasing expatriate savings, these fast growing hydrocarbon economies are an ideal client base for all takeholders,” Sillitoe added. “The ‘open architecture’ model adopted by GCC financial advisers is a welcome sign for future growth as the industry matures and becomes more sophisticated.”
Chance to explore
Sillitoe said the model allows advisers to explore the products and services from several external providers that are in the best interest of the ultimate end user. Insight Discovery conducted the survey in partnership with Amundi Asset management, Franklin Templeton, Morningstar and Standard Life.
Key findings included:
• 60% of financial advisers prefer global emerging market equity funds, while the ‘hottest’ alternative asset classes are gold, commodities and listed real estate.
• The vast majority (83%) of GCC-based financial advisers use products and services of international asset managers, but only 29% are buying directly from these companies.
• Financial advisers dealing with international life insurance companies have risen substantially, to 63%, but growth opportunities still exists.
• There are approximately 3,700 financial advisers in the UAE, a far bigger number than previously estimated.
• GCC-based financial advisers and retail investors are becoming increasingly ‘risk tolerant’ and optimistic.
• Big international asset managers are active in the region but there are still opportunities for new entrants from among the leading life companies.
• The potential for Takaful- or Shariah-compliant insurance remains under-exploited, with fewer than half of advisers saying they see it as a major opportunity.
Dhiraj Rai, Franklin Templeton Investments director, Gulf & Eastern Mediterranean, said there is “tremendous potential” for both international asset management and international life companies to do business with financial advisers in the region. “As the market matures, financial advisers will look at funds with a good reputation, fund manager credentials and excellent investment performance,” Rai said.