But the research was more positive for IFAs as it was the first time they were tied with bank-employed advisers, as they have scored worse than their bank peers in previous surveys.

The survey of over 1,000 individuals, found that recruiters (52%) have maintained the top spot for least trustworthy professionals, followed by call centre operative (33%), credit card issuers (31%), real estate agents (25%) and social media influencers (25%).

For this year’s study, Insight Discovery allowed survey participants to select multiple industry sectors. Western expats seem to be the most dissatisfied, ticking more boxes than any other group. Arab expats, on the other hand, reported themselves to be the least dissatisfied, closely followed by UAE nationals.

Nigel Sillitoe, chief executive of Insight Discovery, said: “It’s disappointing to see recruiters called out yet again for having the lowest professional reputation in the country. This matters because demand for talent is growing exponentially as more and more companies set up or expand in the UAE. Hiring managers and job seekers need efficient, trustworthy recruiters, and we all need them to succeed to keep the economy moving forwards.”

“For those good recruiters out there, this is their time to shine and to gain advantage over those that are causing so much dissatisfaction. Simple steps, like being responsive and giving clear guidance to individuals who are looking for a new job, can make a big reputational difference quite quickly.

“For IFA firms, the results from this year’s study will be encouraging. With so many new advisory firms setting up in the UAE, particularly in the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Markets (ADGM), our survey is well timed. As for why their reputation has improved it’s probably due to a number of factors, including greater transparency and tighter regulations.”

The 12^th edition of the Middle East Investment Panorama report shows insights from chief executives of leading advice firms in the region all of whom have taken steps to counter volatile markets, more demanding clients and the regulatory burden.

Specifically, more than half (57%) believe that the changes to regulatory requirements will boost M&A activity in the region, which may lead to a less crowded sector. By contrast, just a quarter of respondents do not foresee a spike in acquisitions, with the remainder unsure of whether acquisitions will be sparked by regulation.

David Kneeshaw, chief executive of IFGL, said: “This may well be because these respondents see that the introduction of BOD49 and other regulatory changes will bring around a wave of M&A activity and that their firms will be among the winners.”

What clients want

The senior managers also highlighted that clients are changing, along with their demands and ways they wish to interact with financial advisers.

The report found the top five shifts include:

• Clients being more knowledgeable of their finances and investments;
• Higher expectations on disclosure and transparency;
• Greater focus on more product options;
• Increased preference for online and mobile access; and
• Seeking more value from the services they receive.

As a result, 88% of respondents expect greater focus and investment on technology and data analysis tools to improve their offerings to clients.

In terms of value and transparency, advisers are increasingly relying on outsourcing to manage their clients’ money.

The vast majority (71%) regularly recommends discretionary fund management (DFM) services to their customers, with an additional 6% currently considering it.

Insight Discovery’s report says it has become widely accepted that financial advisers may not be the best placed to make and execute investment decisions on behalf of their clients, leading to a rise in outsourcing DFM capabilities to wealth or asset managers in the region.

When selecting a provider, however, the most important factor for advisers seems to be the ability to smooth returns in a volatile environment (46%), followed by their charging structure and research capabilities (both 17%).

Nigel Sillitoe, chief executive and founder of Insight Discovery, said: “Over the years, the advisory market of the Gulf Cooperation Council (GCC) region has grown to the extent that it represents a significant opportunity for asset management companies, wealth managers, international life insurance companies and other groups. This year’s research further reinforces this.”

Financial advisers came fifth in the worst reputation poll for the third year in a row. The profession received a similar score in 2021, up from 9% the previous year.

The survey of 1,016 individuals, found that recruiters have maintained the top spot for least trustworthy professionals, followed by credit card issuers (20%), call centres (18%), real estate companies (12%) and independent financial advisers (10%).

Nigel Sillitoe, chief executive of Insight Discovery, said: “The past 12 months have been exceptionally challenging in lots of ways, especially in relation to job security for many individuals, across all types of sectors. Recruiters don’t seem to have responded by showing the right professional support or guidance for candidates who need it.

“They need to be responsive and give clear guidance to individuals who are looking for a new job, or perhaps even a change of career.”

Progress needed

By contrast, Sillitoe added, financial advisers fared relatively well in the survey. “For IFAs not to appear on this list next time, two things probably need to happen.

“For starters cold calling must stop, whilst less prevalent than in the past, this annoying and antiquated practice still goes with one or two IFA firms being guilty parties.

“Secondly, unregulated firms making outrageous return claims don’t help as they are misleading investors and tarnishing the good work done by so many IFAs in the region.

“Having interviewed so many chief executives at IFA firms, Insight Discovery plans to help the industry by launching a campaign to make it harder for unregulated firms to advertise and generate business leads.”

Insight Discovery surveyed 42 advisers in the Middle East, 26 advisory firm chief executives and 16 bank executives, for its 11th annual Middle East Investment Panorama.

It found that 74% of advisers see a prolonged global recession as the main challenge for their business over the next 12 months. This is followed by an expat exodus from the GCC (66%) and regulatory landscape (51%).

Market volatility (37%) and competition from firms which are not regulated (34%) follow suit.

On the other hand, 80% of advisers sees new technology and data analysis tools as the main opportunity for their business over the next year.

In second place was expanding their business/attracting new customers (71%), with clients’ willingness to invest (63%) in third. Other opportunities included optimising their business/outsourcing investments (46%) and retaining existing clients (43%).

Fees

The UAE advice sector has had to adapt a lot especially with commission-capping regulation BOD49.

This created a lot of change on the business models in the market.

Advisers said that 61% of their business’ total revenue is made up of recurring fees and commissions, while 39% is made up of initial fees and commissions.

The survey also asked how advisers measure effectiveness in their job and 38% said annual commission.

This was followed by number of referrals per year (24%), amount of renewal commission (19%), percentage annual change in transaction volume (10%) and awards and peer recognition (10%).

Changes

Covid-19 has forced people to adapt this has been the same for the advice sector. Resourcing and greater use of technology (38%) is the main change to advisers’ investment decisions.

This is followed by to make liquidity more of a priority (24%) and risk vs return with aims to lower target prices (18%).

Surprisingly, only 3% had put a higher allocation of assets in line with ESG factors. Some 12% did not make a change at all.

In other news, advisers said they had used fund platforms 54% more over the past few months.

This increase in use was followed by DFM services and life insurance protection products ( both 38% more).

In contrast, life insurance savings products were used 57% less and portfolio bonds had a 36% drop in use.

What to expect for the next year?

Insight Discovery set aside six main areas which can be opportunities for the Middle East advice market in the next 12 months:

• AuM gathering from poorly managed advisory firms;
• Continued growth on a similar trajectory based upon a differentiated proposition;
• Market consolidation of IFAs;
• New regulations opening up a new set of customers;
• Promoting being an ethical business; and,
• Retaining existing client relationships.

The consultancy firm also highlighted the biggest challenges for business models over the next year, which include:

• Cashflow, given distressed clients liquidating assets;
• Differentiating between sub-standard advisory firms and the stigma of financial advice;
• Market volatility and uncertainty reducing investing;
• Regulatory arbitrage; and,
• Technology-based advisory models at a fraction of the cost.

End-of-service benefits

Also, Insight Discovery surveyed over 1,000 UAE residents on end-of-services benefits (EoSB).

Only 40% of respondents outside the Dubai International Financial Centre (DIFC) said they were aware of how their gratuity works and what it means for them.

Two-thirds were also confident that they knew how their gratuity worked, as well as what it meant for them financially.

Additionally, around 30% of respondents across the UAE have either only a basic level of awareness about their gratuity or are completely unaware of their scheme.

But 35% of employees in the UAE were either “not very” or “not at all” confident about receiving their gratuity payment when the time came.

In contrast, 71% of DIFC employees were highly confident in receiving their gratuity payment when leaving their current employer.

Meanwhile, the survey also highlighted the savings gap between expats and other employees in the UAE, as 45% of expats either had no means of maintaining a decent standard of living in their retirement or were planning to work beyond retirement age to derive sufficient income.

Some 61% of them said they had no long-term savings at all.

Consultancy firm Insight Discovery surveyed 1,222 UAE residents and found 10% consider them to have a poor reputation, up from 9% in 2020.

Some 27% of respondents overall consider recruitment companies to have the worst reputation in the UAE, while credit card companies came second (20%).

They were followed by telemarketers (18%), real estate agents (13%), and advisers from banks (7%) in sixth place.

However, within the breakdown of the demographics, western expats voted financial advisers as the least trusted group.

Stop cold calling

Nigel Sillitoe, chief executive of Insight Discovery, said: “Tough market conditions are often the best time for any wealth or financial adviser to differentiate themselves and prove their value to clients.

“Now they are more closely regulated in the UAE, consumers should expect to be able to place more trust in the profession as a whole.

“However, for their image amongst western expats to improve, I sense cold calling needs to stop, an annoying practice still used by some firms.

“A ban is only likely to become reality if the local regulators introduced fines for the small number of regulated firms who continue to cold call. They also need to get tougher with unscrupulous unregulated firms, who are definitely tarnishing the reputation of firms who take regulation and qualifications seriously.”