A change is on the way in the relationship that women have with private wealth in the Middle East. Their control is growing and the trend will continue. That carries big implications for the wealth management industry in the region, and beyond.

Women need to get a better deal out of wealth management. As they make up half of the world’s population and increasingly account for significant holders of wealth, it is an issue of natural justice as well as smart commercial sense to ensure that women get top-class service. It matters, for example, that more women are promoted in wealth management roles and are in senior roles. This is not about “political correctness” or “virtue signalling”, but hard, commercial sense. 

Change is taking place, and it is taking place also in the Middle East. For a variety of reasons, women have not always had much chance to get a seat at the financial table, but the situation is not as simple as some impressions might suggest. To write about these topics is Alex Ruffel, partner, and Kate Caldwell, consultant, at the UK-based law firm Irwin Mitchell. The editors have taken great content from Irwin Mitchell before and again welcome this latest contribution. As always, the usual editorial disclaimers apply. To get involved in debate, email the team at tom.burroughes@wealthbriefing.com and jackie.bennion@clearviewpublishing.com

Writing about ‘the Middle East’ is difficult. The term itself only gained wide currency last century and no-one quite agrees what it covers. According to our (Wikipedia) research, it encompasses 17 countries from Cyprus to Yemen via Israel and Turkey. There are large cultural, economic and religious differences between these countries and the role and status of women in them. Attempts to generalise can be misleading and embarrassing. What is clear is that there is a vast amount of wealth in the region - recent estimates suggest that the Middle East has around $3.1 trillion of investable assets - and that a significant and increasing proportion, estimated variously between 20 per cent and 40 per cent, of it is held by, or for women.

Historically, private wealth in the Middle East has often been viewed as family, as opposed to individual, wealth and run centrally, with strategic management led by male family members. Whilst decisions and actions are often highly influenced by female family members, such influence is informal and usually not visible.

We are now seeing increasing participation and visibility of women in entrepreneurship, in the strategic management of family wealth and in the growth of their own independent investment portfolios parallel to but separate from family wealth. The causes for this are complex but include sophisticated and advanced education (for example, more than half of all graduating students in Saudi Arabia are women and Middle Eastern women study across the world), liberalisation of society, increasing globalisation and a shift of wealth between generations that encourages reassessment of who manages it and how.  

Women in the Middle East have been patchily served in the private wealth market. Cultural and religious practices can limit their access to advisors in a male-dominated industry: US or European-style networking may not be an option and women may often feel happier dealing with a female advisor, particularly in relation to their private assets. This is starting to change and there has been a growth in bank and boutique advisory services concentrating on female investors, although it still has a long way to go. The global lifestyle of many high net worth Middle Eastern families can also mitigate any dearth of local advisors: an Omani female investor may very well have an English lawyer, a Swiss banker and a Guernsey trustee.

Apart from access to advisors, is there any difference between the wealth management needs and priorities of female investors in the Middle East?

While there are many highly knowledgeable and sophisticated female investors and entrepreneurs in the Middle East, there is often an experience gap caused by historic factors. They particularly value clear, honest advice that makes no assumptions about their knowledge while avoiding patronising them.

We are seeing greater willingness to take risks and move out of cash and real property into private equity and newer sectors, such as green energy. This is driven by several factors: a growing female entrepreneurial sector; increasing confidence in their own investment decisions; sometimes a well-established family business that allows for greater adventurousness in dealing with the cash that it generates; and recognition that diversification into different geographic regions and sectors is key when the Middle East faces serious threats to its stability. The idea of female investors as risk-averse is often wide of the mark, especially for female entrepreneurs, who have usually had to take significant risks to succeed in societies that can be oriented against them.

Asset protection and succession are also key concerns of many female investors and this can be reflected in both the choice of investments and the structure in which they are held. Sharia law generally means unequal division of assets between male and female children and parents may wish to invest in assets that are not governed by it. Real property in the UK has (almost) always been a desirable investment but has particular interest for investors who wish to ring-fence specific assets for daughters – as Shariah law does not apply to such property, owners can leave it as they wish in accordance with English or Scottish law.  

Use of trusts can also address privacy and security considerations. A trust can provide a protected pot of assets that has limited vulnerability to foreign laws and judgments and whose value and terms are not public information. This is of particular value in a region where some areas have relatively high divorce rates (the rate in Kuwait reached 60 per cent in 2017) and whose financial settlements on divorce are very far from the 50:50 starting point in the UK, for example. Trusts can also continue past the death of their creator, ensuring that, for example, daughters’ inheritances remain protected.

Active philanthropy, often focussing on women’s education and health in the MENA region, is also a priority but there is greater interest in not simply donating but putting a proper governance structure in place for their charitable projects so that the donors are involved in decision-making and the projects are sustainable. This in turn requires a proper investment strategy for any endowments.

As women’s role and visibility in the Middle East develops, we are seeing a significant change in the relationship that women have with private wealth - their control over it is growing and this trend is only likely to continue.