Invesco’s latest Middle East Asset Management Study, released on Monday, found the average length of stay in Gulf Cooperation Council (GCC) nations by western expatriates, of which 80% were from the UK, was now 12.9 years.
This compared with an average of 18.1 years for non-resident Indians (NRIs) in the region, and 16.9 years for other Arab expatriates, such as those from Egypt and Lebanon.
According to Nick Tolchard, head of Invesco Middle East, one key conclusion from this data, is that western expatriate mobility and transience is not as significant an issue for the (IFA) industry as many had thought.
Tolchard said the region’s very low tax rates was cited by many respondents as the main reason for people staying longer. “Not only relative to the UK, but (its) also attractive relative to other expat centres such as Singapore,” he said.
For the NRI’s, it was corporate tax that was the main driver and for Arab expats it was actually security.
“The work-life balance was another factor citied in the study as a factor keeping people in the region once they have settled there,” Tolchard said.
Shorter Life wrappers
In terms of savings products, the study found Westerners were heavy users of mutual funds and life wrappers, and were also quite strong for NRIs but have not penetrated the Arab expat segment yet.
“Funds and life wrappers are the contestable market for wealth managers,” Tolchard said.
The survey found that western expatriates held 26% of their retirement savings in life wrappers and 10% in mutual funds. For NRI’s the numbers were 14% in the life products and 13% in mutual funds.
The bulk of the rest of retirement funds for both groups of expatriates were held in either property or bank accounts.
Among the IFA’s, the survey found there had been a shift to shorter duration contracts for regular and single premium savings plans.
“There has been a decrease in the proportion of 25-year savings plans with a corresponding increase in 5- and 10-year plans as well as recurring single premium products, which brings product terms more in line with expatriate length of stay,” said Tolchard.