SME profile: Building trust with investors

After more than a decade of being a financial adviser to the wealthy, Daniel Dickinson has set up Arlo Associates in the UAE. He wants to model the firm after St James’s Place, a FTSE 100 company with £55.8 billion under management.

Daniel Dickinson’s ambitions for Arlo Associates include listing the company over the next five to 10 years. Satish Kumar / The National

Daniel Dickinson, a financial adviser to the wealthy for more than a decade, found that the global nature of his business meant that he was spending more time working in the UAE than at home in Britain.

So seven years ago he decided that living in Dubai would be more beneficial for him and his clients.

Four years later, following stints with two of the biggest financial advisory companies in the UAE, Mr Dickinson knew he was ready to fulfil his ambition of going it alone and took his first steps on the entrepreneurial path. Today, with a team comprising former senior bankers in Britain, he has made Arlo Associates – named after his two-year-old son – a reality.

But obtaining the appropriate business licence was not a simple process, says the 32-year-old.

Arlo Associates needed to have Dh6 million in its bank account and a further Dh6m in bank guarantees – mostly raised from private investors – to obtain regulatory approval to operate.

The company has obtained the Insurance Authority licence to be a broker, but the experience was fraught with sleepless nights.

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“We were given it [the licence] last month and now we can move forward,” says Mr Dickinson.

“There have been some very dark moments in the past couple of years when it seemed that nothing was happening, but now we are here and able to trade.”

With a huge amount of capital – including his savings – tied up, employees already on the payroll and offices rented in Dubai and Abu Dhabi, Mr Dickinson came under enormous pressure to keep Arlo Associates on track.

“A lot of people trusted me and it has finally paid off,” he says.

According to the Insurance Authority’s website, the regulator records an authorised broker in the Insurance Brokers Register.

The process costs Dh10,000 in fees and should take 20 working days, according to the authority.

While the process for Arlo Associates took longer than expected, in the bigger picture financial regulators have raised the bar for financial advisory companies who seek a business licence.

The regulators stipulated that financial advisory companies must raise their capital base and ensure that their employees pass rigorous examinations, among other requirements.

Globally, the financial advisory industry has reputational problems. The United States labour department, for example, says that investors lose about US$17 billion a year because brokers do not fully disclose their fees and provide advice that is not in their clients’ best interests.

The image of the financial advisory industry has also been battered in the UAE in recent years, thanks to the system of commission-based selling and the high frequency of cold calls.

Mr Dickinson is willing to defend cold calling, but he says that solely commission-based provision of financial advice and products does not benefit the industry’s reputation in the UAE.

“We do cold call because any business that wants to grow has to reach out to customers,” he says. “We definitely do not have an army of cold callers, but it is a valid business practice and I am proud of the products we offer.”

Mr Dickinson says Arlo Associates is “totally transparent as to who we are and what we do” and that its clients are told in advance of all commissions that it stands to make from selling any financial products. “I would never sell anything that I wouldn’t buy myself,” he says.

Financial advisers at Arlo Associates must obtain relevant qualifications from the Chartered Institute for Securities and Investment in Britain.

In the Islamic finance sector, Mr Dickinson says there is a huge potential for business growth and plans to recruit experts in Sharia-compliant financial products.

There are good reasons to be bullish on Islamic finance. The professional services consultancy E&Y predicts that about $900bn in Islamic assets would be traded in 2017, up from $300bn this year.

Arlo Associates has eight staffers based in Abu Dhabi, at the Al Mamoura building, and 15 at an office in Dubai, adjacent to the Burj Khalifa.

Mr Dickinson expects to recruit 50 to 60 new staffers between this year and the end of next year.

The company has grown quickly and is advising on about $200m worth of clients’ funds.

Mr Dickinson’s ambitions for Arlo Associates include listing the company over the next five to 10 years.

He models the company after St James’s Place Wealth Management, a FTSE 100 company with £55.8bn (Dh313bn) of client funds under management.

“They are huge of course, but it would be great for us to be anything like St James’s Place a few years from now,” says Mr Dickinson. “We will build this brand until we are known as a company that you can trust. ”

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