Well-being should be a national aspiration

It was the king of Bhutan who, in 1972, coined the idea of happiness being a currency even more valuable than a country’s GDP. And since the UN General Assembly passed a resolution in 2011 urging member nations to follow Bhutan’s example and measure happiness and well-being as a “fundamental human goal”, the UAE has undertaken steps to do just that, even creating a post for a Minister of State for Happiness and Well-being in 2016. In the latest move, the cabinet has unveiled a 12-year programme, called the National Strategy for Well-being 2031, comprising 90 projects to boost the “physical, psychological and digital health of future generations”, according to Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai. The initiatives aim to improve quality of life on an individual, community and nationwide basis. They are recognition that well-being is critical to productivity and the ability to contribute to society.

Living miles away from one’s homeland can often be an isolating and disconcerting experience. And while the UAE often ranks in the top 20 countries in the World Happiness Report, the traditional support bases of friends and family are not always close to hand when needed. New Zealand has just released its first well-being budget in recognition that GDP alone does not govern standards of life and satisfaction. Too often, there can be a tendency to value countries and their citizens according to economics and financial wealth – but taken alone, they are no guarantee of happiness. It is in that light that the UAE, as a nation with a steadfast economy, can afford to focus on the quality of life of its residents. Not only will this empower people to live better, happier lives but putting well-being front and centre will help attract and retain world-class talent.

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.”

Well-being should be a national aspiration

The UAE's 12-year programme will improve quality of life on an individual, community and nationwide basis