Unprecedented stock market rallies have helped the wealth of high net worth investors (HNWIs) to swell over the past year. Within this trend, the Middle East has emerged as a remarkable player, leading global growth in terms of overall wealth (up 17.2%) and number of investors (up 13.2%) , according to the Capgemini World Wealth Report.
What is perhaps more interesting than these top-notch numbers, impressive as they are, is how the region is quickly becoming a sandbox for wider upheavals in the industry. From the spread of ESG to the growth of millennials and the rise of digital currencies, the forces of change disrupting the way wealth managers do business can be seen in great relief from Dubai to Riyadh.
The Gulf economies represent a microcosm of broader changes in the industry as a new generation of entrepreneurs tap into what was a wave of venture capital that quickly turned into a tsunami. The growth of this sector has been quite remarkable, especially since it coincided with the pandemic.
While many companies have been forced to shut down and lay off staff, the Gulf start-up ecosystem has flourished as new names in cloud kitchens, agro-tech and prop-tech have shown how entrepreneurial prosperity can arise from adversity. The 50 Most Funded Middle Eastern startups ranked by Forbes raised more than $ 959 million in total combined funding last year. More than half of this amount went to the Top 10 start-ups.
Funds in abundance
Pure Harvest Smart Farms in the United Arab Emirates was able to raise more than $ 135 million to help finance its growth, while Nana in Saudi Arabia, an online grocery market, raised $ 28.9 million. Such sums underline the growing importance of this customer segment in the region and the need for asset managers to adapt their offers to the specific needs of this growing pool of entrepreneurial talent.
The Gulf also reflects the growing proportion of women in the global wealth management clientele. In the United States, there are 114% more female entrepreneurs than 20 years ago, according to Capgemini. Some 40 percent of businesses in the world’s largest economy are owned by women.
The representation of women among new start-ups and existing business leaders is also increasing rapidly in the Gulf states, albeit from a much lower base. The economic and social transformation programs adopted by countries such as the United Arab Emirates and Saudi Arabia place a strong emphasis on increasing the participation of women in the economy, while at the same time, more women are also starting their own new businesses.
Of the 50 startups ranked by Forbes in the Middle East last year, eight were co-founded by women. The unprecedented events of the past year and a half have changed our lives in ways few of us could have predicted.
The pandemic has also changed what we value and that extends to the world of investing. Look no further than the exponential growth of environment, social and governance (ESG) focused investment strategies to see how quickly perceptions of companies and entire sectors can change.
From the handshake to the nudge and the zoom call, the way we meet, greet and communicate is changing. The way we work and the wealth we create are also changing. These emerging trends are rapidly recalibrating the way advisors interact with their clients – and nowhere is this quicksand more visible than in this region.