Family Office

Family Offices Perched To Unlock Middle East Wealth

Jackie Bennion Deputy Editor 20 January 2020

Family Offices Perched To Unlock Middle East Wealth

Stability is a byword for protecting wealth, and Middle Eastern families living in a fractious neighbourhood are increasingly turning to international norms and financial centres to manage their affairs.

A growing global mindset and worries over poltical instability are having a profound impact on how wealthy Middle Eastern families structure their wealth. More are turning to sophisticated structures such as family offices and tailored vehicles to manage their assets, according to new report from advisors in the region.

A survey by Intertrust of more than 50 professional advisors servicing clients in the UAE, Saudi Arabia, Qatar, Oman, Kuwait and Bahrain found that three-quarters (74 per cent) of advisors expect high net worth families in the Middle East to adopt a more global approach. This has been seen in a “significant growth” of family offices, special purpose vehicles, funds, offshore trusts, and private trust companies (PTCs) in the region to safeguard existing wealth and build for the future, the fund services group said, following its survey last October.

An overwhelming 83 per cent of respondents said that political instability was the driving force for wanting to structure their wealth outside the region, and ranked Jersey, Singapore and Switzerland as the most favoured jurisdictions in which to conduct offshore affairs.

Succession planning also led concerns, foremost finding solutions that suit the desires of next generation siblings to build businesses outside their birth countries.

The study comes at a tricky time in the region after US drone strikes earlier this month killed Iran’s top strategist and Quds leader Qassem Soleimani. In tit-for-tat reprisals, hostilities soared again when Iran admitted that it had mistakenly shot down a Ukrainian passenger plane shortly after takeoff from Tehran, killing all 176 people on board. Qatar intervened this week to help dial down hostilities, but these events show how quickly the region’s fractious geopolitics can ignite.

The advisory feedback to Intertrust suggests that the next five years will be pivotal for wealth management in the Middle East as families look at adopting international norms and become more aware of governance and regulation in protecting wealth.

“As living, learning and working overseas is becoming common, particularly among the next generation, families are becoming increasingly mindful of the region’s political landscape and the need to mitigate risk by taking a more sophisticated approach to managing their wealth,” Ian Rumens, global head of private wealth at Intertrust said.

Also important to families is access to overseas education (57 per cent); improved access to global tech-enabled financial solutions (53 per cent); and better travel and communication links, the study found.

It predicts that family offices will be the fastest growing wealth vehicle in the next few years, offering families a combination of investment management, ownership tracking and reporting capabilities.This trend is already the case for the sector in the UAE, where the benefits of a strong infrastructure, a flexible regulatory regime and excellent global transport links have boosted financial services, the report said.

Register for WealthBriefing today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes