The next generation of high-net-worth women will transform family and banking dynamics as they achieve higher levels of education and become more involved in family businesses, according to a new research report.
Up to 82 per cent of women from wealthy families are expected to inherit huge sums of wealth over the next two decades, making them significant beneficiaries of an estimated $5 trillion that will be transferred to the next generation by 2030, the Smarter Succession survey by Barclays Private Bank said on Monday.
Despite the increased wealth among women, 41 per cent of respondents said they were not involved in the financial decision making of their family businesses, according to the survey, which polled more than 400 global HNW family members in countries including France, Germany, India, Saudi Arabia, the UAE and UK.
Forty-six per cent of women surveyed said they are involved in the day-to-day running of family businesses compared with 60 per cent of men, the study added.
However, social and cultural changes have started to change the dynamics of HNW families, with 54 per cent of women holding stakes in family businesses compared with 57 per cent of men, while 43 per cent of HNW women have postgraduate qualifications compared with just 14 per cent of their parents.
“The fact that female ownership of family businesses does not equate to high levels of day-to-day involvement potentially leaves female voices less heard in family business board rooms,” the report said.
However, the tide across the Gulf is changing for women in HNW families and also within family businesses, according to Rahim Daya, head of Barclays Private Bank for the UAE and Middle East.
“Increased access to higher levels of education is having powerful implications for women in the Middle East and family offices in the region are increasingly professionalising their boards," Mr Daya added.
“We are seeing women take more leadership positions and become increasingly involved in all financial decisions.”
While 83 per cent of male respondents said they are the decision makers for family wealth, the survey found that 29 per cent of both men and women turned to their sons on matters of wealth, finance and investment compared with just 14 per cent who sought advice from their daughters.
However, a cultural shift is occurring and younger generations have a less traditional outlook on life, it added.
“As traditional family roles change and more women hold prominent positions in international business, their growing global influence is going to be a major economic force over the next decade, redefining areas that have historically been focused on, and dominated by, men,” Rasha Badawi, director at Barclays Wealth and Investment Management Middle East, said.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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COMPANY PROFILE
Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed
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Director: Ayan Mukerji
Stars: Hrithik Roshan, NTR, Kiara Advani, Ashutosh Rana
Rating: 2/5
The Bio
Favourite vegetable: “I really like the taste of the beetroot, the potatoes and the eggplant we are producing.”
Holiday destination: “I like Paris very much, it’s a city very close to my heart.”
Book: “Das Kapital, by Karl Marx. I am not a communist, but there are a lot of lessons for the capitalist system, if you let it get out of control, and humanity.”
Musician: “I like very much Fairuz, the Lebanese singer, and the other is Umm Kulthum. Fairuz is for listening to in the morning, Umm Kulthum for the night.”
