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Evolving with the times

Elizabeth Diffin

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The UAE's unique population brings challenges and opportunities for advisors.

WHEN THINKING ABOUT THE FINANCIAL SERVICES PROFESSION in the United Arab Emirates, one word immediately comes to mind for Abhishek Datta: evolution. Growth and change seem only natural, especially considering the UAE was formed a mere 49 years ago.

Datta, a three-year MDRT member from Dubai, began working as a financial advisor in India. When he moved to the UAE post-global financial crisis, he noticed its people had been greatly impacted by the economic downturn.

“Everyone was pushing products to their clients rather than giving advice,” Datta said. “Today you see a much more tailored approach. Products are sold based on need, the regulatory environment has evolved and best practices from the world over are being adopted.”

The UAE’s unique population composition also creates challenges for the financial services profession. Migrants make up nearly 90% of the total population, with the majority of expatriates (58%) hailing from South Asia, according to the U.S. Central Intelligence Agency. Datta says this impacts his ability to sell to residents who might not be planning a permanent stay in the country.

“Clients have a very short-term view when it comes to investing or planning for their finances, since they cannot predict or estimate the time they will spend in this country,” he said. “This uncertainty either leads to people constantly putting off the decision to do something or makes them look for short-term solutions.”

Kiran Jain, an eight-year MDRT member whose target market is Indian expats, says the UAE’s diversity also means a range of preconceptions and knowledge of insurance.

“We work in a highly multicultural environment in the UAE,” she said. “Every person’s need and understanding of insurance is different. The challenge lies in understanding what the client wants and needs so we can provide the best solutions.”

Expatriates in the UAE have also been the target of bad-faith advisors looking to make a quick buck, according to Amitab Mitbawkar, MBA, CWM, a five-year MDRT member from Dubai.

“Expats in the UAE have long been suffering from rampant mis-selling,” he said. “Rogue advisors and bancassurance sales staff who focused on product sales more than sound financial advice created a lot of problems for good financial advisors.”

As a result of that situation — and to prevent additional problems in the future — the UAE is enforcing more stringent regulations, introducing new standards that include a cap on first-year commissions, stricter know-your-customer rules and anti-money-laundering laws. The new regulations took effect in April 2020, so it’s too soon to know their impact. But Jain, who is based in Dubai, thinks it ultimately will be positive.

“I believe that in the long term, better regulation is a step in the right direction for the industry,” she said.

Rogue advisors and bancassurance sales staff who focused on product sales more than sound financial advice created a lot of problems for good financial advisors.
— Amitab Mitbawkar

And Datta believes new regulations will boost the reputation of the profession as well.

“One thing clients have universally expressed is the general trust deficit that exists between clients and advisors,” he said. “This is because there have been many fly-by-night, unregulated schemes that have been sold in the market. This, along with the financial crisis, led to massive losses for clients and gave financial advisors a bad rep.”

Now advisors are increasingly focused on their clients’ futures, taking specific needs into account.

“I like to reach out to people to guide them for the present as well as the future, explaining to them how to maximize their portfolio with the resources they currently have,” said Haresh Dayaram Mirchandani, a 13-year MDRT member from Dubai.

Mirchandani does not have a target market, choosing instead to maintain a “diversified client base.” Datta also has adopted this approach, working with what he calls “a broad spectrum of clients.” His only criteria is that the client is serious about their money.

“Every client has the same problem, only the magnitude differs,” he said. “I want to be able to help everyone who asks for it. My approach is to provide a holistic solution to a client. No client is too small or too big for me.”

Mitbawkar has adopted a similar style in working with his target market of professionals and business owners. He noticed that the life insurance industry was “oversaturated,” so he chose to concentrate on “creating a lifestyle income” for his clients.

“The challenge is to convey to them the importance of proper financial advice and the justification of my AUM-based fees,” he said. “I try to shift their focus from investment returns — which are important — to achieving the financial goals they have set for themselves — which are even more important.”

He predicts that this highly individualized approach will become even more important as clients increasingly turn to online channels for their financial advice.

And Datta says that even though the UAE is at “the forefront of adopting fintech solutions,” the personal touch of creating holistic solutions for clients is ultimately what will differentiate advisors.

“When I moved here, anyone and everyone could be a financial advisor,” Datta said. “That has changed. My job is to simplify the life of my clients. If people have fewer things to worry about, it lets them focus on what’s important.”

CONTACT

Abhishek Datta abhishek.datta@cfsgroup.com

Kiran Jain kiran.jain@licinternationaluae.com

Haresh Dayaram Mirchandani hareshdm@gmail.com

Amitab Mitbawkar amit@amitmitbawkar.com

 

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