The Brief / Finance
ILLUSTRATION: GETTY IMAGES/VECTORAART
Saod Mohammed Obaidalla, EVP and head of Private Banking, Emirates NBD
The great wealth transfer
As Millennials and Gen Z begin to accumulate wealth, their investment needs are likely to transform the institutional wealth management function. Impact investing, which combines financial returns with social and environmental benefits, is seeing an upsurge in interest, with 59 per cent of the region’s family businesses ready to take the lead in sustainable business practices. Investments in emerging technologies and digital transformation and assets are also gaining traction. REGULATORY SUPPORT
With preservation and innovation as the two pillars ensuring the future of family businesses, UAE laws have kept pace to support and enhance the role of family offices in the diversification and growth of As Millennials and Gen Z increasingly take their place in the national economy. The Onshore Trust Law introduced in the boardrooms of family businesses, particularly in the 2020 puts in place frameworks for the region, it’s crucial that wealth advisory is customised organisation of family offices in the UAE for the new generation and abroad to ensure stable and sustainable asset protection and succession planning. Also in 2020, Dubai he world is currently experiencintroduced an opt-in law to regulate “AS MILLENNIALS AND GEN Z ing the “Great Wealth Transfer”, family business ownership. The BEGIN TO ACCUMULATE WEALTH, law not only underscores the during which the world’s wealthiest individuals, each with a net THEIR INVESTMENT NEEDS importance of family, enshrining worth of more than $5m, will transfer an a collaborative approach, but also ARE LIKELY TO TRANSFORM estimated $18.3tn to their children by the provides for the new generation’s THE INSTITUTIONAL WEALTH year 2030. This figure represents oneentrepreneurial vision. fourth of the global wealth of $62tn held Dispute resolution too has been MANAGEMENT FUNCTION” by high-net-worth individuals (HNWIs). in the spotlight, with Decree No. Of this, generational wealth transfer by 34 of 2021 concerning the Dubai Z investor differs from older counterparts, HNWIs in the Middle East will see 19,038 International Arbitration Centre particularly in view of findings that suggest individuals pass on $604bn to their kids. (DIAC) making significant changes to that one in five businesses have a next genThe UAE’s leadership, from the time of arbitral institutions in Dubai. Issued in eration member (aged 40 or younger) on the founding fathers, has always believed in 2022, Abu Dhabi’s new family business the board or on the management team. the potential of youth to change the world ownership governance law addresses the Millennials, for instance, are starting for the better, entrusting the young with a issue of continuity in the contribution of out with the greatest amount of formal place in the driver’s seat when it comes to the thriving sector to the economy even education of any generation in history. development. The Emirati model of youth as it facilitates a smooth transition to the Coming of age in a digital, borderless world, empowerment treats the young as the most succeeding generation. their concerns are more global than those cherished assets for ensuring creativity and Globally, family businesses and family of previous generations. In a multicultural innovation, while enshrining the positive offices remain the the largest contributors to nation such as the UAE, it is not surprising values of society. GDP, and the largest employers in the private that this generation has embraced sector. They hold the key to economic A DIFFERENT APPROACH diversity in investments, markets, and growth and wellbeing. Being attuned to The generational wealth transfer has impliin management styles. These inheritors the needs of those who will be entrusted to cations for wealth managers so that the have the potential to globalise a business; manage these businesses in future will usher great potential of this transition can be in fact, 58 per cent of Middle East family in better business practices, while delivering realised. Wealth advisors must adapt to the businesses consider expansion into new results that ensure the continued relevance many ways in which the Millennial or Gen markets a top priority. of advisory services across generations.
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June 2022
gulfbusiness.com
