The recently-concluded Future Advisory Forum organised by International Adviser in Dubai was a venue to deliberate various aspects of NRI investments and regulations.
Participating in the inaugural NRI Adviser Panel discussion at the forum were Ashok Sardana, managing director, Continental Insurance Brokers; Krishnan Ramachanrdan, chief executive, Barjeel Geojit Securities; DJ Sengupta, chief executive and co-founder, Capstone Insurance Brokers; and Navin Nihalani, chief executive and managing partner of Compass Insurance Brokers.
Ramachanrdan said: “Ten to fifteen years ago NRIs were looking at short term investments and protection. But today they are looking at staying here over the long term, getting their children educated in the UAE itself, or sending them abroad for higher education, but wanting them to come back to settle down in the UAE. Accordingly, the NRI perspective on investment has changed over the years.
“That means NRIs have to have the right perspective on more products, including educational products, and at the same time the market needs more qualified people to sell the right products. They should know how the industry is evolving in the next few years in an expanding market as there are more opportunities for providing advice and products.”
New visa rules
This coincides with the UAE setting out plans to introduce a new five-year visa for expat retirees older than 55 years will likely encourage expats to remain in later stages of their life as well as keep capital in the host country, which will in turn boost the economy.
Expats will be able to obtain the new visa if they own a real estate investment of at least AED2 million (US$ 540,000), have savings of more than AED1 million ($270,000), or can prove income of at least AED20,000 ($5,445) per month. The new visa is expected to be introduced from next year.
The visa for retired expats will result in increased investment in the property sector and the emergence of retirement communities in the UAE.
DJ Sengupta, managing partner, Dubai-based insurance and investment advisory firm Capstone, said the dreams and aspirations of NRIs were different a few years ago. But today, they are more akin to dreams and aspirations of global citizens. As such, their savings and investment needs are changing and the providers and advisers should change their business plan accordingly.
What if indemnified commission stopped tomorrow?
The panel was asked to comment on the question if they would reduce their commissions to offer better value to clients. The answers were mixed.
Ramachanrdan said: “Customers at some point in time do not bother about what they have to pay by way of commission if they get value for their money. One should be able to explain the product proposition and their benefits rather than the commission.
“It depends on what you want to offer to the customer. In fact they are looking at long term relationship as long as they remain in the value chain for the next few years. Advisers make more money out from remuneration based on long term relationships than indemnified commission. The examples are systematic investment, annuity-basis investment and similar products.”
Commenting on the question whether customers trust advisers, Sardana said: “You have to build trust over a long term period. More than the commission, the goal should be making value for the client. A good relationship should come first before money. And once you build that first trust, he will not go anywhere.”
Ramachanrdan’s view is that “if you are open to your customers and explain the product proposition, they will trust you. It is difficult to manage the first-time customer in the first year of relationship. After that, once he has confidence in you, he would know that whatever is happening is something good for him that would add value for him. At the end of the day what matters is that when the customer makes money he gains above an average return and all are happy.”
Sengupta said trust would come if you share the right information with clients: “Things have really changed in the past 15 years with all our clients and customers now having access to information as easily as they require. So, when we do not share the right information it is only a matter of an hour before they find it out, and they will start distrusting you.”