Wealth Management in the Middle East: Boon or Bust?
Middle East Institute | Bryane Michael | 7.23.12
Middle Eastern policymakers and bankers will develop an indigenous wealth management industry which keeps the super-wealthy’s investments at home. Developing a local national wealth management industry requires letting in foreign competition, changing banking and securities laws, and growing local companies whose shares are worth buying. The first part of the article reviews trends in wealth and wealth management in the Middle East and North African (MENA) region. We show that $800 billion lies-in-waiting for ambitious wealth managers to prospect. We show that foreign wealth managers will continue to capture the lion’s share of this wealth because most local banks can not compete. In the article’s second part, we show why Turkey has succeeded in growing a nationally and internationally competitive wealth management industry — whereas Saudi Arabia’s remains less than perfect. The Turkish policy and the Turkish wealth management industry have succeeded to some extent, because they have grown the pool of the wealth. Whereas the Saudi super-rich contently send their money abroad, their Turkish counterparts use their funds to develop local industry, though they also send quite a lot abroad. In the third section, we describe how policymakers can help bring the billions abroad home by making business easier, reforming banking and securities law, and forcing local banks to become more efficient. In the last section, we describe how foreign wealth management firms can increase their assets under management in the region. These multi-trillion dollar mammoths should use their negotiating power to open MENA markets and grow local multi-millionaires.