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.”

This follows its announcement in December 2022 that it wants to achieve a 100% increase of the amount of the money managed by local funds and introduce new types of regulated investment funds.

The newly established fund regime aims to revamp the existing legislative framework relating to the incorporation and governance of public and private funds established in the UAE and to grow the local UAE funds market.

Al Tamini said: “The changes include, inter alia, expedited processing periods for the approval of public/private funds, reduction of regulatory requirements and additional types of funds recognised by SCA.

“The new fund regulations have expanded the exemptions of arrangements that would not be considered as a fund to cover joint bank accounts, insurance and pension contracts, joint investments between the parent, holding, subsidiary and sister companies, timeshare properties and other sharing property use, employees share options schemes managed by the issuer or group company and government funds.”

SCA has introduced two fund structures which are:

• Family funds – a local fund where the ownership of its units is restricted to one or more persons from one family; and
• Self-managed funds – where a local fund is established by two or more individuals or corporates.

In addition, the regulation establishes new categories of specialised funds such as real estate development funds, precious metal funds, direct financing funds, ESG funds, capital protection funds, protected-cell funds, charity investment funds and commodities investment funds.

Numbers

Al Tamini & Co added that an “important measure” in the SCA regime is the reduction in capital requirements of fund management companies to AED1m from AED50m (£11m, $13.6m, €12.5m)and fund administration companies to AED1m from AED5m. It also removes foreign ownership restrictions, allowing 100% foreign ownership of such companies.

Furthermore, the application process timelines have been reduced to five working days for private funds and 10 working days for public funds for the approval of establishment of the respective fund. The SCA’s final decision on applications for new types of funds will be issued within 20 working days from the date of submission.

Al Tamini said: “While existing funds would need to conduct suitable due diligence to ensure compliance with the new fund regulations, it is worthy to note that there are some exemptions.

“Additionally, such funds are permitted to continue with activities as per the categorization and investment policy set out in their offering document. In the event no categorisation or investment policy is set out then compliance on such matters in accordance with the new fund regulation shall apply.

“It is expected that the SCA will issue a separate decision on the regulation of joint investment plans and investment funds linked to insurance products established by UAE licensed insurance companies and until further notice, status quo can be maintained.”

Further provisions under the newly established SCA regime include:

• Investment funds may issue and offer sukuk and bonds for the general public;
• Public real estate funds may be offered to the public through the book building mechanism;
• Permitting mergers and acquisitions of local investment funds;
• Buyback rules of investment funds traded on the stock exchange; and
• Capital increases of investment funds may be increased in instalments and tranches.

Separately, the SCA has also issued an administrative decision that contains annexes to the regulations, which contain guidelines on the content of the offering document and Key Investor Information Document (Kiid); the investment policies of the local funds; classifications of local funds; and the evaluation of units of the local public fund.

Foreign funds

The regime comes as SCA recently stopped the renewal of foreign investment funds aimed at the public.

Al Tamini said that SCA has also issued the Foreign Funds Promotion Regulation that provides new criteria on the promotion, offering, and registration of foreign funds to investors in the UAE.

The regulator has issued approvals to 1,965 foreign funds to promote and offer their funds through licensed promoters in the UAE. The intention of the Foreign Funds Promotion Regulation is to restrict the access of foreign funds to UAE retail investors.

The promotion of foreign funds in the UAE can only be made by way of private placement to professional and counterparty investors. The law firm said that investors “appear to be restricted from accessing public foreign funds under the Foreign Funds Promotion Regulations”.

UAE licensed promoters have been provided a grace period of six months, from 1 January 2023, to continue with existing promotion arrangements or until the remaining period of those arrangements expire, whichever is earlier.

It is expected that the SCA will issue a circular and will reach out to promoters on existing foreign funds that have been registered with the SCA to provide further guidance.

The Foreign Funds Promotion Regulations is effective as of 17 January 2023.

Foster growth for domestic funds

Tom Bicknell, partner at Pinsent Masons, told International Adviser: “SCA’s recently introduced restriction on the promotion of foreign funds to retail investors comes in parallel to their overhaul of the domestic funds regime.

“Widely seen as a move to foster growth of the domestic funds industry, foreign funds can now only be promoted to professional investors and market counterparties. Promoters have a maximum six-month grace period to cease the promotion of foreign funds to their retail clients.

“SCA’s new funds regime has been released with the intent of doubling the amount of investments managed by funds locally. Indeed, shortened timelines, expanded fund categories and reduction in minimum capital requirements are all directed at aligning SCA’s regime with international best practice.”

Nigel Sillitoe, founder and chief executive of Insight Discovery, told IA: “The main regulator of funds – in this case, SCA – and other policymakers, face an important decision: what sort of funds industry do they want for the UAE?

“On one hand, the industry could be one where most of the funds – in terms of numbers and AuM – are Ucits or other products that are domiciled elsewhere and that are distributed across national borders. On the other hand, the industry could be one where most of the funds are domiciled locally.

“Ucits and other foreign-domiciled funds have a number of attractions. There is no one model of a market for investment funds that is the best for all countries. Nevertheless, and in two landmark decisions made in mid-January, the SCA has made it absolutely clear that it wants the latter – an industry that is dominated by locally based funds.”

The regulator posted a story on its website on 1 January 2023 – but unfortunately the article was published in Arabic only. The only information in English is the headline entitled – “SCA launches a campaign to confront unlicensed financial activities”.

Translated from Arabic to English, SCA said that it will protect “licensed financial activities from unfair competition” and strengthen the fight against money laundering.

Maryam Al-Suwaidi, chief executive of SCA, said that the campaign will help provide support to protect investors and their savings, develop the securities sector and push it to advanced and competitive levels regionally and globally.

She added that the campaign highlights the need to be alert and wary of the fraudulent methods used by the unregulated companies and what they do in terms of impersonating real companies licensed by the regulatory authorities, fabricating forged commercial and professional documents and licences, as well as warning investors against dealing with any unlicensed financial activity in order to preserve their savings.

‘Good day’

Nigel Sillitoe, chief executive of Insight Discovery, said in a Linkedin post: “This is a good day for wealth managers in the UAE and beyond who take regulation seriously, hopefully some of our rants and complaints against unregulated firms may have, in a small way, contributed to the launch of this campaign.”

Prior to the SCA announcement, a source told International Adviser that large regulatory changes in the UAE has led to more “unregulated products” in the market.

They added: “I think this will be a temporary phase. As things settle over the next couple of years, it will become much more efficient under the current regulations. The UAE still has a journey ahead with regulation. The pace of change will be faster. It still has areas which could be regulated better. We believe that the regulators are looking at it. This is not the end. There’s more to come.”

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.”

And when the country introduced its golden visa scheme in 2019, it undoubtedly attracted a lot of interest.

The visas issued are for either five or 10 years.

The requirements for both are very similar, with one of the main differences being the sum required to be invested: for the former its at least AED5m in a property in the UAE, while the latter is of at least AED10m (£2m, $2.7m, €2.3m) in a local investment fund.

Case study

Nigel Sillitoe, chief executive of UAE-based Insight Discovery, has recently been granted a 10-year golden visa in the country, and he spoke with International Adviser about his experience in getting one.

He found the application “very straight forward”, also helped by the fact that he hired a public relations officer (PRO), as they deal with government agencies in the UAE.

“I was nominated back in January [2022] and received my 10-year residency within six weeks,” he said. “There are three ways to apply, either directly via the government golden visa website, being recommended by an influencer – such as a senior Emirati – or being a VIP being courted by the prime minister’s office.

“Unfortunately, I never received my call from the PMs office,” Sillitoe jokingly said.

He started looking into the scheme after several friends and business contacts obtained one – as he said now over 50,000 people in the UAE have been granted a golden visa.

“When I investigated further, it soon became obvious that I would be mad not to apply, ” he added. “Besides the status of being granted a golden visa, the main benefit is that I no longer have to apply to renew my residency every two years.

“More importantly, it saves money as the upfront fee for a 10-year golden visa is just AED4,500, a big saving over renewing your residency every two years over 10 years.”

Benefits

If applicants cannot secure a recommendation, however, self-sponsorship can be an attractive route, Sillitoe said, especially for employees of a company.

“Let’s take the example of an executive working for a financial advisory business in Dubai,” he said. “If this individual decides to take some time off or is fired, with a golden visa they can stay in the country and maintain their bank accounts and rental agreement.

“If, however, you don’t have a golden visa, you lose your job and cannot find a new role within three months, which will in turn provide you with a two-year residency, you have no option but to leave the country and have your credit cards and bank accounts closed.

“The only way around this is to set up a company and sponsor yourself, however, this can be pretty expensive, plus you still have to renew your residency every two years.

“Another benefit is that if there was another covid variant and the UAE introduced a new travel lockdown, if you were stuck overseas but held a golden visa you could still enter the country. This exemption I believe only applies to Emiratis and golden visa holders.”

Tips

Sillitoe emphasised how important it was for him to have a professional figure guiding him through the process.

“I outsourced it to a PRO, a great investment considering it cost just AED1,000.”

He did warn future applicants to make sure the PRO they choose is accredited with the golden visa agency.

Sillitoe said that, before applying, candidates should make sure they have a “a terrific biography, which spells out your career, how long you have lived in the UAE, what contribution you have made and your future plans whilst living here”.

People should also time their applications right and make sure they make their submissions during a period where they don’t have any travel plans because “the PRO will need your passport for what could be just one week or several weeks, depending on where you are within the queue”.