BRIDGING THE FINANCIAL KNOWLEDGE GAP

Gautam Duggal – Regional Head of Wealth Management for Africa, the Middle East and Europe – Head of Wealth Management for the UAE, Standard Chartered Bank.

What are new economic realities with an increase in salary incomes that are driving thirst for personal finance investment knowledge?

Twenty years ago, before the internet revolution, getting access to information was often difficult. Today, the world is producing exponentially more information than ever before. So one of today’s main challenges is working out how to process that information and make decisions. Some of the other new economic realities include:

  • Global trade conflicts that put world economic growth at risk
  • Ongoing political uncertainties with Brexit, the emergence of right extremes in EU and other parts of the Emerging markets
  • Disruptive technology growing at a fast pace
  • Disruptive nature of Climate change
  • Regulatory changes affecting the financial markets

All of the above macro factors and many other micro factors have led to a thirst for personal finance investment knowledge

What are the gaps in knowledge on terms of financial literacy and market information?

Many millionaires are woefully ignorant of financial terms, strategies and functions. They depend on the wisdom of financial advisors, lawyers and accountants to manage their assets.

They expect their financial advisor to educate them on topics they are unfamiliar with.

There are not many who keep themselves abreast of current affairs and market news.

Advisors and providers need to have educational tools and programs available to assist investors who are uncomfortable with their knowledge level.

Firms should advertise their educational programs as a way to entice new investors and to make it easier for current clients to educate themselves.

There are many terms related to banking, finance and investing which Millionaires cannot easily define.

How can regulatory tightening increase consumer confidence and appetite for saving and reinvesting their hard earned income for growth in the Middle East?

Any regulated and mature financial market / economy earn consumer confidence. Expatriates generally see themselves as living and working in the GCC region for a limited period of time, taking advantage of low taxation to save capital. Expatriate residents of GCC countries have traditionally relied on financial advisors. In general, greater regulation has been consistent with lower and more transparent fees for clients and higher levels of service. Over the last year or so, though, advisors have had to contend with a new wave of regulations and charges emanating from governments within the GCC region

Many of the leading financial advisor groups are part of long-established UK firms. Over the years, these companies have moved away from fee-based products to a more customer-centric offering to ensure that their operations in GCC countries meet the standards that are required by regulators in the UK. Compliance with the UK’s Retail Distribution Review (RDR) regime, for instance, was a key issue for managers of major financial advisor groups in the GCC region. (Excerpt from EY GCC wealth report)

Where are a new generation of consumers searching for financial advice? Word of mouth, banking institutions, online?

The new generation and mainly the millennials have inadequate financial knowledge and they do not consult financial consultants. Research shows that Millennials want financial advisors who are digitally connected and can assist in the financial education desired by them. They look for providers of simplified financial solutions through sophisticated digital platforms.

That said, Millennials want to make their own decisions to support and execute their own transactions. If this form of self-directed digital engagement is not available, they are willing to move their relationship to advisors based on a strong digital platform.

What is the type of advice they should look for in terms of savings, loans and mortgages, securities are they seeking most currently?

Keeping in mind that the millennials seek different kinds of financial advice it is important to stress on the financial education bit.

According to a report from Efma, The Rise of Affluent Millennials, affluent Millennials have different financial needs than other generations as well:

  • Nearly seven out of ten affluent Millennials are likely to consider non-traditional financial offerings.
  • They envision a cashless, sharing-based economy, with 33% believing they won’t even need a bank.
  • They are conservative when investing money, with 52% of their assets being cash.
  • 84% seek financial education and advice from a financial institution or financial advisor.
  • 47% would move to a financial services firm with a better technology platform.
  • They are twice as likely as other generations to invest in companies with a stated social or environmental impact.

What types of financial literacy can institutions offer consumers in the UAE? How is this being delivered? Online, by in–house wealth managers and banking apps?

We believe that education supported by insightful products and services make it simpler for people to take control of their finances and financial future. Financial literacy is offered through online courses – in house advisors and wealth managers. The society can only build a thriving and sustainable economy if its people are financially literate. This means that the institutions should be committed to providing information, products and resources to enable people to make the right choices, and in turn, ensure their sustainable financial future.

How is the millennial segment being captured and on-boarded? What is the advice for this segment in terms of saving, investments and inheritance wealth management?

Financial services organizations of all sizes need to evaluate how they will serve the affluent millennial consumer in the future. This includes basic transactional services (mobile deposit capture and digital account opening) to more advanced functionality, such as digital wealth management.

  • Establishing trust and improving transparency
  • Communicating effectively
  • Personalizing and socializing engagement
  • Changing the wealth manager mindsets
  • Embracing technology

The wealth management landscape is influenced by Millennials. Millenanials are tech-savvy, encumbered with debt, philanthropic, financially risk-averse, and have a culturally inclusive worldview –  transforming products and engagement model to a digital platform is the only way to serve all segments more efficiently and effectively. This is especially true since all generations are quickly embracing the power of mobility and digitalization in all life engagements.

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