The UAE is one of the strongest markets for financial advisers globally, with great potential for further growth if current challenges are overcome, said a study.

About 40 per cent of UAE advisers said their business is growing strongly, compared to 13 per cent of advisers globally, owing to strong client relationships, providing high level of advice and making the right investment decisions.

The UAE financial adviser study conducted by the Durable Portfolio Construction Research Centre of Natixis Global Asset Management (NGAM), an asset manager based on assets under management, said that nearly 72 per cent of UAE advisers are in the growth phase.

“The industry is clearly moving in the right direction, with the majority of advisers, both globally and in the UAE, reporting good levels of business growth,” said Moad Touhami, head of distribution, NGAM Middle East.

Globally, one of the biggest challenges advisers face is constructing portfolios that reduce risks and enhance returns simultaneously. Data showed that UAE advisers are twice more likely than their international peers to balance client asset growth with protection of capital, with 77 per cent of local advisers seeking specific investment strategies aimed at managing volatility.

“Asset management companies can play a critical role in meeting these challenges and contributing to the development of the financial advisory business with research, data and new investment techniques to help advisers construct better portfolios,” said Touhami.

NGAM has developed a new philosophy called Durable Portfolio Construction that replaces traditional portfolio construction with a new set of investment principles based on a more nuanced approach better suited to navigating today’s complex markets.

Risk is made the central focus of portfolio construction, targeting a range of risk rather than a range of returns. Improved diversification seeks to help manage volatility and reduce correlations to help investors stay invested and meet their long-term goals.

“Our research shows that when it comes to making investment decisions, advisers are focused on risk, volatility and income – all essential to constructing more durable portfolios aimed at meeting client objectives in all market conditions,” said Touhami.

Furthermore, the study identified key areas of focus and challenges that UAE based advisers say are critical in their day to day jobs.

They spend a considerable amount of time explaining investment concepts to clients, which is the top most proposition for about 37 per cent of UAE advisers, as compared to 22 per cent globally.

A majority of 80 per cent of individual investors in the UAE said they did not have strong investment knowledge, in an earlier survey conducted by NGAM of individual investors globally and in the UAE.        

“At NGAM we strongly believe in enhancing financial knowledge and are proud to be able to contribute to the development of the investment industry with data and research. When combined with our durable portfolio construction philosophy, NGAM works together with the advisory community to help educate clients on how to establish more durable portfolios that are better suited to the challenges of today’s modern markets,” added Touhami. - TradeArabia News Service