Offshore clients
“In Dubai, our offshore clients are typically UK or western expats, mostly from English-speaking countries,” Lord explains.
“One trigger point for advice is a request for a general wealth planning overview. Clients asking ‘What should I be doing as far as my finances are concerned to make sure I am maximising my savings and investment potential and I’m going to meet my goals in the future?’
“Another area is retirement advice. People ask, ‘What should I do now UK pension rules have changed?’, ‘I’ve heard about Qrops’ or ‘I plan to return to the UK to retire in three years, what should I be thinking about?’
“One core element [of our work] is [where] clients have been advised previously by another firm in the region. They have a contractual regular savings plan or contractual lump sum plan but do not really understand what they have got.”
According to Lord, 20% of the work carried out by Killik in UAE is dealing with clients who have previously been sold a product rather than given appropriate advice.
“I do not like using the word sold, but it applies in the UAE,” she says. “There is less of a requirement to demonstrate suitability.”
Less stringent
While the financial advice environment in the Middle East may not be as stringent as other regions, Lord has seen improvement during her time there.
“When I first moved to the Middle East [in the wake of the global financial crash] RDR was coming to the UK, the world was falling off a cliff as far as investment was concerned, and clients in general were extremely concerned about investing.
“What you saw, particularly in 2009, was a lot of advisers arriving in the United Arab Emirates who had been affected by the changes in the UK.
“Advisers with quite a low levels of qualification arrived; as did people desperate to make some money to survive in what was a horrible time in the global economy.”
Lord is confident that the situation has stabilised and that there has been a transition back to more appropriately qualified advisers operating in the local market.
“To give credit to our key competitors, they have put emphasis on the importance of getting qualifications. Over the past few years, in particular, you have definitely seen a higher degree of qualification.”
There is still work to be done, Lord says: the regions’ commitment to a commission-based payment structure means that advisers have little or no incentive to gain further qualifications as they can continue to derive an income without having to put in the extra effort.
“The regulators in Dubai are becoming much more aware about wealth management, financial advice delivery and are being more stringent on what is required.
“However, in an international market it is extremely hard to have one set of standard qualifications.”
Regulatory cohesion
Lord is adamant, however, that greater cohesion between the regulatory and licensing bodies is needed; not only for the firms operating in the region but also so that clients know who regulates who.
Having a regulator with teeth makes a massive difference, she says. “The insurance authority has been making inroads and laying down more stringent requirements. But there are still so many different entities: you have got an insurance authority, a central bank, the Securities and Commodities Authority, Dubai International Financial Centre, and a couple of others.
“There needs to be far greater cohesion in what the Dubai regulators want in terms of outcomes. While you have got different organisations with varying views, you are never going to get consistent outcomes.”
