South African firm sees major UAE growth

South Africa-based FirstRand Group, a financial services provider firm, has seen its private wealth management business in the UAE grow by 30 per cent year-on-year in the UAE, the head of the firm in Dubai told Emirates 24|7.

The private wealth management arm of the firm began its operations in the UAE, its sole office in the Middle East region, only around two years ago.

However, its assets under management (AuM) have grown up by 30 per cent year on year.

“We have seen our business grow over the past year, although 2008 and the earlier part of 2009 were slow periods for us. Over time, we have been able to attract clients that buy into our philosophy of wealth preservation and have seen our assets under management grow by 30 per cent year-

on-year from June last year to June this year,” Eugene Odendaal, CEO, FirstRand Private Wealth Management, Dubai said.

DIFC will remain FirstRand’s hub for business from the Middle East, Odendaal added.

“DIFC and the UAE are of strategic importance to FirstRand, particularly given the growth of business in the Middle East and Africa corridor, and the expertise that FirstRand has in Africa,” he said.

However, he did agree that wealth managers in the region are finding it tough to structure a portfolio allocation strategy for their high net  worth clients that suit their objectives.

“Determining the investment needs of a client, incorporating the risk profile of that client and then constructing a portfolio that will cater for his retirement needs is quite a process, but this is only the beginning. Wealth managers need to constantly mange the portfolio over time

given the fact that the client’s needs may change over a period of time. It can be a process that may last for 20 years, depending in the client,” he said.

He said: “With the recent financial crisis, the greatest concerns we have seen among our UAE-based clients are market risk, institutions that they are investing with, and suitability of the advice they receive.”

The asset-price declines because of the global financial crisis and the near or actual collapse of some of the best-known wealth management firms has altered the behavior of clients, prompting them to move into less risky financial instruments and pushing revenue levels 25 to 30 per cent

below where they were before the crisis, according to a recent report by Booz & Co.

However, it said private banks have continued to deliver profits despite the huge declines in their revenue bases.

This is mainly because of the fundamental characteristics in the wealth management market that remain unscathed by the recent financial turmoil, the report said.

It said factors such as private banking being an industry fundamentally geared for growth and revenue pools being cyclical in nature and highly dependent on the underlying equity market performance, would remain the core drivers of the private banking sector.
 

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