GCC countries are growing in global influence in an increasingly multipolar world and investors in the region are demanding more from their financial partners. Dr. Arnaud Leclercq, Partner Holding Privé and Chairman, Lombard Odier Middle East, believes that wealth managers will need to adapt in four key areas.
A paradigmatic shift in the global geopolitical landscape is underway. Countries in Asia, Africa, Latin America and the Middle East – often referred to as the ‘Global South’ – are growing in power and influence.
This shift is particularly evident in the Gulf. Situated at the crossroads of Asia, Africa and Europe, GCC countries are asserting their own strategic interests, and expanding their diplomatic and trade ties in a period of historic peace and prosperity.
In the UEA, developments are closely watched by the ‘traditional West’. It oversees some of the world’s largest sovereign wealth funds and has established a financial hub that can compete globally. Indeed, Abu Dhabi accounted for 14% of all IPOs worldwide in the first quarter of 2023, highlighting the strength of its capital markets.
Core to the UAE’s success are the great strides it has taken to foster a well-regulated and effective wealth management industry. Central banks, regulators and financial authorities are collaborating to create a dynamic ecosystem that is providing investors in the region with increasingly flexible wealth solutions.
Responding to evolving client needs
So how are these seismic changes affecting HNW families, investors and entrepreneurs across the region? How are their needs changing and how can wealth managers adapt?
Lombard Odier is a Swiss private bank and investment specialist with deep roots in the Middle East. We have been servicing HNW individuals and families in the region for 50 years. Today, our dedicated team offers bespoke banking and investment solutions from offices in Dubai and Abu Dhabi.
From our vantage point, we are seeing a growing demand for a banking partner that truly understands what this trend means for their clients: one that understands their needs and values, can help them to navigate these changes and accompany them throughout their lives in both their personal and business affairs.
In practical terms, we are seeing four key trends as these geopolitical shifts unfold.
Scale and reach
HNW investors want to consolidate their wealth across fewer partners that can offer more in terms of client service and access to the best global investment opportunities.
Over the last two years, we have seen ongoing investment in both traditional and alternative growth assets such as private equity, as well as more risk-controlled strategies such as ETFs and tracker funds. Investors are also exploiting the full spectrum of sectors and geographies, including emerging markets and sustainability-focused opportunities.
Traditional wealth managers with a local presence and a global investment expertise will be able to leverage these developments, offering clients the benefits of both scale and a highly personalised client service.
Stability
Stability is also of vital importance to wealthy investors in the Middle East at a time of rising geopolitical tensions and persistently high inflation.
Founded in 1796, Lombard Odier is the oldest private bank in Geneva and one of the best capitalised in Europe. We have the highest Fitch rating for a bank of our size and we are able to offer a degree of insulation from global financial risks and the volatility that can accompany large-scale changes.
Islamic finance
We are finding that interest for Islamic investments is as high among younger HNW investors in the region as their older counterparts. Indeed, our recent survey of 300 HNW business owners across the region confirms that allocations to Islamic equities and sukuk are set to rise.
As result, we are seeing increasing demand for our investment solutions managed in line with the principles of Islamic finance, which we have offered to our clients for a decade. Our Shariah-compliant discretionary mandate falls within our long tradition of social responsibility and a commitment to developing sustainable and responsible investment solutions.
Sustainable investment
This year’s UN Climate Change Conference (COP28) will take place in Dubai, bringing renewed focus on the region’s efforts to diversify away from hydrocarbons. Our research shows that investors are increasingly looking to invest sustainably, but they also understand that sustainability factors are an important performance driver. As a result, many investors are looking to integrate ESG factors into their portfolios, receive regular investment research and sustainability investment ideas from their advisors.
At Lombard Odier, sustainability is not just a priority, it is an investment conviction. We offer clients a broad range of high-conviction sustainability and impact portfolios across asset classes. We also offer a ground-breaking Shariah-compliant ESG equity portfolio for Islamic investors that want to drive positive change.
A strategically important market
We are well positioned to meet the shifting needs of our clients and we continue to allocate considerable resources to our operations in the Middle East.
In 2019, Lombard Odier was the first Swiss private bank to receive a licence to operate at the Abu Dhabi Global Market. As of September 2023, the Bank also has a licence from the Dubai International Financial Centre (DIFC) and our long-standing office in Dubai will be replaced by a new subsidiary at the heart of the DIFC.
Our dedicated Middle East team, which has doubled in the last five years, services clients from offices in Geneva, Zurich and London, as well as Dubai and Abu Dhabi, covering the market in a truly integrated way.