There are several emerging trends in the wealth management space. One of the most important is how clients are increasingly seeking personalised investment plans rather than taking a traditional approach to building investment portfolios.
This trend is partly due to a reaction to the Covid-19 pandemic, which is expected to cause a semi-permanent change in risk attitudes among older, wealthier people who are now inclined to save more and spend less. This is the inverse of what we have seen traditionally.
The investment goals of older people previously took a shorter-term view, while younger investors – with time on their side – engaged in a longer-term view to achieve financial independence and realise goals such as home ownership and retirement planning.
Typically, we have seen that clients planning for the long term invest in equities and diversified solutions such as mutual funds, or alternatively into long-dated quality sovereign and corporate credit, offering a regular income stream.
More recently, there has been a rise in the popularity of environmental, social and governance-focused investments, along with increasing awareness that these factors can be tied to a company’s long-term performance.
One clear trend is that amid the current market uncertainty, wealth management is rising in prominence to help meet the goals and aspirations of clients looking for sustainable ways to build and protect their financial futures.
For those at the beginning of their investment journey, it is critical to identify a clear set of goals and invest with them in mind. As an investor, this will enable you to determine where, how much and how long to invest. Additionally, it increases the probability of achieving your goals, as well as inculcates discipline and acts as support during a difficult period.
Start your financial planning journey with goals-based investing.
Identify your goals
You can have several goals, ranging from ensuring a comfortable retirement and buying a mansion to saving for a luxury vacation – each with a unique timetable. Some need to be achieved in the short term (zero to one year), some in the medium term (two to five years) and others over a period of five years and above.
Wealth advisers can help you prioritise and calculate the amount required to meet goals of various timelines, create an investment portfolio to achieve them and an emergency fund of liquid investments that can be used in unforeseen circumstances.
Determine risk profile
Every investment carries a certain degree of risk. Similarly, every investor will have a unique risk profile, which reflects one’s ability and willingness to take those risks. This is a vital factor to take into account before one constructs their portfolio.
For those seeking to create long-term wealth, it is important to focus on risk-adjusted returns. This can be achieved by ensuring that the overall risk of your portfolio is aligned with your risk appetite.
A risk-averse strategy should ideally weigh heavily towards fixed-income bearing investments, while those willing to absorb high levels of risk can skew towards medium- and high-risk investments.
Create an optimal asset allocation strategy
Once the goals, risk profile and investment time horizon have been determined, the next step is to create an asset-allocation strategy that can help you achieve your goals while adhering to your risk-return, time-bound criteria.
An asset allocation strategy creates a diversified portfolio that is spread across several asset classes. Since different asset classes respond varyingly to similar macroeconomic developments, diversification ensures that no single asset class has a large impact on overall portfolio returns.
A key takeaway from the pandemic has been to take a long-term view towards investments, where possible. Being patient and potentially holding onto investments, even when markets are down, could reap rewards when they recover in value in the future.
Additionally, the pandemic has shown that investors should not put all their investment “eggs” in one basket. For example, if the bulk of your investments was in airlines, the Covid-19 pandemic would have slashed the value of your portfolio.
Therefore, the best hedge against market volatility remains a balanced and diverse portfolio that spreads risk.
Monitoring
Investment management is an ongoing process. It requires discipline and the right guidance. You must periodically review the performance of your portfolio to ensure that you are still adhering to your chosen asset-allocation strategy and remain on track to achieve your financial goals.
In the event of any divergence, remember that you can always take steps to correct your course. Goals-based investing gives your financial plan purpose and helps you to invest in a targeted and methodical manner.
Mufazzal Kajiji is head of Mashreq Gold at Mashreq Bank.
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Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
Russia's Muslim Heartlands
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His favourite book - 1984 by George Orwell
His favourite quote - 'If you think education is expensive, try ignorance' by Derek Bok, Former President of Harvard
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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.”
