According to HSBC’s global wealth chief Nuno Matos, the UAE is emerging as a prominent wealth management center. However, certain entrepreneurs express concerns that their families may lack the requisite skills, drive, and dedication to successfully inherit their businesses.
In an exclusive interview with Arabian Business, Nuno Matos, CEO of Wealth and Personal Banking at HSBC, emphasized the UAE’s status as a “priority market” in global wealth management. Matos highlighted the nation’s increasing significance to international investors, particularly noting its recent removal from the Financial Action Task Force’s grey list as a factor reinforcing its appeal.
After fulfilling all 15 recommendations in its action plan, the UAE was removed from the FATF’s financial crime watch list, achieved through collaborative efforts between UAE ministries, government, and the private sector. Despite this achievement, the UAE remains committed to enhancing its anti-financial crime efforts by enhancing policies, laws, and cooperation with international partners. Matos described the removal as a “positive step,” anticipating increased wealth inflows and a boost in the country’s ranking.
UAE ranks number 7 as the largest wealth management booking centre
As per the Global Wealth Report 2023 by Boston Consulting Group (BCG), the UAE holds the 7th position globally as the largest wealth management booking center.
The report highlights the UAE’s increasing appeal as a booking center for both banks and investors, resulting in a surge in assets.
In 2022, the UAE experienced faster growth in assets under management (AuM) compared to other booking centers, attracting assets from various regions including the Middle East, Asia-Pacific, Africa, and Eastern Europe, particularly from Russia. The projected annual growth rate for financial wealth until 2027 stands at a robust 10 percent.
The report noted that the UAE’s attractiveness stems from its numerous benefits for individuals and businesses, including minimal regulatory hurdles for establishing entities like family offices and investing in tangible assets such as real estate. Additionally, multinational banks are establishing hubs in the UAE in anticipation of robust growth, both domestically and internationally, in wealth management.
Business owners want ‘skills, capabilities and passion’ before passing it to younger family members
Recent insights from the HSBC Global Entrepreneurial Wealth report reveal that entrepreneurs worldwide express concerns about the preparedness of the next generation.
Matos from HSBC explained that entrepreneurs prioritize skills, capabilities, and passion for their business when assessing the next generation.
Among 973 entrepreneurs surveyed across nine markets, over 33 percent are contemplating exiting their businesses.
However, those possessing over $10 million in assets are three times less inclined to have devised plans for transferring their wealth compared to those with assets ranging between $5 and $10 million.
Concerns about passing on wealth to younger family members primarily revolve around their work ethic.
Matos emphasized that entrepreneurs seek specific qualities in the next generation and may consider professional management if such criteria aren’t met.
Many family businesses introduce the next generation early, encouraging them to start from entry-level positions and progress to management roles to gain experience and skills. Ownership reflects commitment and care, but if the next generation lacks passion, exploring alternative professional options may be advisable.
