A study, carried out for London-based behavioural finance experts Oxford Risk, looks at the attitudes of wealth managers in MENA towards robo advisors and digital-only wealth managers and assesses whether numbers will climb.

Wealth managers in the MENA region are expecting the number of robo-advisors and digital-only wealth managers to rise, new research carried out for behavioural finance experts Oxford Risk shows.

The study, which involved interviewing independent financial advisors and wealth managers in MENA who collectively manage assets of around $290 billion, found that one in three of them expect the number of digital-only solutions to increase dramatically by 2025.

Another 45 per cent expect a slight increase in the number of robo-advisors and digital-only solutions whilst 21 per cent expect no change, the research undertaken with wealth managers in the United Arab Emirates, Saudi Arabia, Bahrain, Qatar, Oman, Egypt, and Kuwait found.

The forecasts build on the impact of the Covid-19 pandemic in terms of the adoption of technology across the region, with lockdowns and restrictions forcing companies to find new ways of working, the firm said.

The study shows that 68 per cent of wealth managers questioned found that the pandemic has accelerated the technology revolution in the MENA wealth management sector. However, one in eight disagree that the pandemic has had an effect.

Oxford Risk consequently urges wealth advisors in the region to make more use of technology to provide improved services to clients based on understanding their needs through detailed profiling.

“The increased use of technology is transforming businesses around the world and is clearly having a major impact in the MENA region,” Greg B Davies PhD, head of behavioural finance, Oxford Risk said.

“The rise of digital-only solutions is to be expected as the technology revolution speeds up in the MENA wealth management sector. There are major benefits for wealth managers and clients from increasing their use of technology and algorithms,” he added.

Oxford Risk, founded in 2002, aims to apply behavioural finance expertise and technology to help its clients deliver superior advice and service more efficiently. The subject of behavioural finance has grown more mainstream within the wealth management sector in recent years. The term applies to understanding how people mistake portfolio gains as a result of pure skill rather than also accepting the role of chance, or treating losses more emotionally than they do gains, and following crowd behaviour. These insights draw on views about how humans have evolved from pre-history, and are used to explain events such as stock market booms and busts, or share trading frenzies such as the GameStop affair in the US more than a year ago, or the regular gyrations of bitcoin. The pandemic, Russia’s invasion of Ukraine and a spike in energy prices have given plenty of reasons for emotions to hold sway in markets.

The study was carried out by independent research company PureProfile, on behalf of Oxford Risk. It interviewed 100 independent financial advisors and wealth managers in Egypt, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates and Bahrain during April 2022 using an online methodology.