If there is one certainty in life, it’s that it is unpredictable. All sorts of troubling things can be thrown in your way, from a road accident to falling ill or losing a job. If you don’t have any money set aside when things go wrong unexpectedly, those challenges can be even harder to deal with.
Other events can be predicted with a bit more certainty, whether that is school fees, planning a family holiday, or the need to put some money aside for retirement. Here too, having enough money to be able to cope with these things is essential.
It is for such reasons that financial planning has become an increasingly common, even vital, tool for more and more people, helping them to deal with both the expected and the unexpected events, the happy or the sad. Yet while the need for financial planning may now be widely recognised, it is not necessarily a simple task to achieve. That opens up an opportunity for banks and other financial industry professionals, for whom long-term financial planning is now often a key area of engagement with clients.
ADCB, for example, offers a wide range of services, ranging from insurance to savings plans, and investment services. Unit-linked plans can be used as savings vehicles over the medium to long term, with regular premiums being paid in that can vary in size depending on how much a customer can afford to contribute and their savings goals. The returns on such products depends on the performance of the funds that the money is invested in, which carries an element of risk, but there are also other savings plans that are designed to provide guaranteed benefits.
It can take time and expertise to properly understand what options are available and what makes most sense for each individual. Most people will find that getting professional advice is a necessary part of the decision-making process.
“Our clients are financially aware and recognise the need for financial planning,” says Sachin Patki Head of Excellency Segment at ADCB. “They are generally professionals and entrepreneurs who work hard to generate their wealth and wish to ensure that the fruits of their efforts are preserved and enhanced in order to meet long term goals such as children’s education, retirement income or transfer of assets to the next generation. However time constraints often prevent them from devoting as much attention as they would like to their own wealth management.”
The growth of the financial planning market in the UAE fits in with a wider global trend. According to the Financial Planning Standards Board (FPSB), a US-based industry body, there are now more than 150,000 certified financial planners working around the world.
Typically, such professionals help to guide their clients through the options available, finding the right products to suit their circumstances. This is not a one-off process, however. The needs of clients change over time, as do their own ambitions and their ability to save and invest. The constant evolution of technology means that the way in which members of the public or industry professionals can access products is also in a state of flux. And of course regulations and laws are always subject to change.
“Changes in market conditions, the use of technology, and an evolving regulatory environment all affect how financial planners work with clients,” says Noel Maye, chief executive officer of the FPSB, which has recently completed a year-long review of its standards.
The type of services that are available is also subject to change, with new areas rising in importance as others become less popular. Sharia-compliant financial planning is one area that has been showing strong signs of growth, according to the UK-based Chartered Institute for Securities & Investment (CISI), which has a membership base of more than 40,000 finance industry professionals in 121 countries around the world.
Within the Middle East region, the CISI has developed a series of partnerships with regulatory authorities in the UAE, Oman, Qatar, Bahrain, Palestine, and Lebanon and says that demand for Islamic finance qualifications has been particularly marked in the UAE.
“The increased numbers of people taking professional qualification exams indicates the growing desire to continue improving the standard of Islamic finance services offered in the region,” says Matthew Cowan, regional director for the Middle East at the CISI. “[It] underlines the fact that the UAE, and Dubai in particular, is forging its reputation as the world’s Islamic finance capital.”
When it comes to providing financial planning services, banks can have an advantage over others in the market, particularly if they can offer a wide range of services and already have a long-standing relationship with a client. Customers can use a bank’s mortgage product to invest in real estate as an asset class, for example, or use it to access global mutual funds or bonds. However, the dynamism of the financial sector means that banks, along with other service providers, also have to constantly adapt what they offer.
“ADCB has been offering financial planning tools to its clients over different segments for the last several years,” says Sachin Patki Head of Excellency Segment at ADCB. “The range of investment products has expanded exponentially over the past decades to include alternatives, income strategies, hybrid strategies, and other innovative products, as well as traditional fixed income and equity vehicles. At the same time, our investment team has grown to include in-house strategists, economists, fund analysts and other investment specialists.”
In a sense, the decisions that the banks are making for themselves mirror the decisions that their customers are having to take. Those providing financial planning advice need to constantly keep an eye on the market to see what areas they need to prioritise, what to concentrate on, and what direction it is most sensible to go on. For institutions and individuals alike, it pays to plan.
This is a sponsored article written for Abu Dhabi Commercial Bank
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