“We’re also seeing an increase in the use of structured products, especially in the five year area,” he said.
Asset allocation
In terms of asset allocation, IFA reported asset allocation to equities and bonds, including domestic bonds, in 2015 and stable use of alternatives.
Tolchard said this suggested there was a very marked difference in allocation strategies between the IFA market and institutional market in the Middle East.
“Your average sovereign wealth fund is piling into in real estate, infrastructure and private equity. Whereas your average adviser is putting their clients into global equity portfolios”, he said.
Fund selection dying
Another trend revealed in the survey is an ongoing shift by IFA’s in the Middle East away from fund selection for their clients to the use of either risk-rated, internal model portfolios or an external platform or a discretionary fund manager.
Tolchard said fully two third of the respondents to the survey said that in the future they planned to make more use of either internally-generated risk-rated model portfolios or to outsource the investment management.
“There is an ongoing shift away from the fund selection approach towards risk-rated or managed solutions provided by the intermediary. That is definitely the direction of travel,” he said.
The Invesco survey also polled IFA’s on their view of the effectiveness of the region’s regulators in delivering good outcomes for clients.
Regulator change
It found where regulatory effectiveness was weakest is around remuneration or commissions.
“There is a view that there is very limited regulation on commissions,” Tolchard said. “There was strong support for regulatory change from both life companies and intermediaries.”
“There was a sense of welcoming change and wanting to work with the regulators in order to improve client outcomes.”
The survey also found there was concern over a lack of price competition in specific market and product segments due to challenges in obtaining licences.
The Invesco survey was conducted between April and June this year and included interviews with various retail segments. It surveyed family office advisers who looked after local ultra-high net worth investors, advisory arms of private banks servicing high net worth clients, retail bank advisory divisions and independent financial advisers working for investors with up to $5m investable assets.
