Jersey Finance unveils Gulf research at DIFC office launch

Posted: 13/11/2018

Richard Nunn at DIFC office launchHigh-net-worth clients in the Gulf region are poorly prepared and inadequately structured for the transition of wealth across generations. So said 92 per cent of respondents in a survey report launched by Jersey Finance at the opening of its new office in the Dubai International Finance Centre this week.

Estimating that only six per cent of family businesses will make it to the third generation unless current structures are made more effective and compliant, the study concludes that clients in the Gulf need expert guidance in terms of structures and products, and that the services of international finance centres (IFCs) will become increasingly important.

The report, entitled Wealth Structuring and the International Financial Centres: Perspectives from the GCC, reflects the views of over 70 wealth management industry practitioners working in the GCC market at a roundtable in September in Dubai. 

With an estimated US$1 trillion of wealth set to transition between families and generations in the Middle East during the next decade, the report highlights the opportunities that await HNW investors and wealth management companies in the region. 

According to the research, there is a growing preference from clients to professionalise the way succession planning is managed, despite the lack of preparedness. Against this backdrop, IFCs that can demonstrate their dedication to transparency, ethics and quality will survive and prosper in this changing environment. 

Future moves

The white paper explores the future role of wealth structuring and IFCs in the GCC region, as the world faces increased global regulation coupled with growing demands for financial and wealth compliance. 

Richard Nunn (pictured), Head of Business Development at Jersey Finance, said: “We are seeing a growing momentum among the older generation HNWIs who are reviewing their wealth planning strategies while they are still firmly at the helm.

"As this is predominantly a family and very personal wealth market, wealth transition and succession planning are still two of the most important topics that the wealth management industry is focused on in this part of the world. 

"As legal and financial infrastructures continue to evolve globally and locally, there is a stronger need for first-class IFCs and financial practitioners to provide a full suite of wealth management services to cater to the needs of GCC wealthy individuals.”

The report shows clients are gradually refining their views on their structures in place – 75 per cent of clients now stress test their existing wealth structures, while 42 per cent see reputation as a critical factor when selecting an IFC.

The use of offshore jurisdictions is highly driven by the geopolitical climate and fears of instability (25 per cent) and succession planning (25 per cent) followed by privacy and confidentiality (17 per cent), asset protection (17 per cent), tax efficiency (8 per cent), and diversification of jurisdictions and assets (8 per cent). This is adding more impetus to clients’ initiatives towards global asset/wealth diversification, wealth structuring and use of IFCs.

Choice of IFC

The research also indicates that regional markets believe their confidentiality will be best safeguarded in those IFCs known to maintain their reputational excellence. HNWI clients in the Middle East understand that the selection of IFC is critical, with reputation being the most important factor.  

Nunn added: “In this context, our presence in the Dubai International Finance Centre presents a big opportunity as it boasts a dynamic, and integrated business environment. Jersey has a long history in the region and, amidst increasing local and global regulation and compliance requirements, has been successful at promoting its credibility as an IFC.

"As such, we are very proud to become the only IFC in the DIFC, a testament to our commitment to the region and a strong endorsement to the wealth creation dynamics here.”

Pictured: Jersey Finance’s Richard Nunn at the office launch in the DIFC

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