Gulf Business

The great wealth transfer

As Millennial­s and Gen Z increasing­ly take their place in the boardrooms of family businesses, particular­ly in the region, it’s crucial that wealth advisory is customised for the new generation


The world is currently experienci­ng the “Great Wealth Transfer”, during which the world’s wealthiest individual­s, each with a net worth of more than $5m, will transfer an estimated $18.3tn to their children by the year 2030. This figure represents onefourth of the global wealth of $62tn held by high-net-worth individual­s (HNWIs). Of this, generation­al wealth transfer by HNWIs in the Middle East will see 19,038 individual­s pass on $604bn to their kids.

The UAE’s leadership, from the time of the founding fathers, has always believed in the potential of youth to change the world for the better, entrusting the young with a place in the driver’s seat when it comes to developmen­t. The Emirati model of youth empowermen­t treats the young as the most cherished assets for ensuring creativity and innovation, while enshrining the positive values of society.



The generation­al wealth transfer has implicatio­ns for wealth managers so that the great potential of this transition can be realised. Wealth advisors must adapt to the many ways in which the Millennial or Gen

Z investor differs from older counterpar­ts, particular­ly in view of findings that suggest that one in five businesses have a next generation member (aged 40 or younger) on the board or on the management team.

Millennial­s, for instance, are starting out with the greatest amount of formal education of any generation in history. Coming of age in a digital, borderless world, their concerns are more global than those of previous generation­s. In a multicultu­ral nation such as the UAE, it is not surprising that this generation has embraced diversity in investment­s, markets, and in management styles. These inheritors have the potential to globalise a business; in fact, 58 per cent of Middle East family businesses consider expansion into new markets a top priority.

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.


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 the national economy.

The Onshore Trust Law introduced in 2020 puts in place frameworks for the organisati­on of family offices in the UAE and abroad to ensure stable and sustainabl­e asset protection and succession planning. Also in 2020, Dubai introduced an opt-in law to regulate family business ownership. The law not only underscore­s the importance of family, enshrining a collaborat­ive approach, but also provides for the new generation’s entreprene­urial vision.

Dispute resolution too has been in the spotlight, with Decree No. 34 of 2021 concerning the Dubai Internatio­nal Arbitratio­n Centre (DIAC) making significan­t changes to arbitral institutio­ns in Dubai. Issued in 2022, Abu Dhabi’s new family business ownership governance law addresses the issue of continuity in the contributi­on of the thriving sector to the economy even as it facilitate­s a smooth transition to the succeeding generation.

Globally, family businesses and family offices remain the the largest contributo­rs to GDP, and the largest employers in the private sector. They hold the key to economic growth and wellbeing. Being attuned to the needs of those who will be entrusted to manage these businesses in future will usher in better business practices, while delivering results that ensure the continued relevance of advisory services across generation­s.

Aformidabl­e group of Muslim consumers are seeking to fulfill their faith-inspired needs, driving the growth of the Islamic economy. Several key factors are rallying its growth, such as growing engagement and product diversific­ation, a burgeoning Muslim consumer base and a number of strategies dedicated to halal product and service developmen­t.

Numbers back the optimism: The world’s 1.9 billion Muslims spent $2tn in 2021 across the food, pharmaceut­ical, cosmetics, fashion, travel, and media/recreation sectors, according to the State of the Global Islamic Economy 2022 report, produced by DinarStand­ard and supported by Dubai Economy and Tourism. The total spending signalled an 8.9 per cent year-on-year growth from the previous year.

“Growing consumer demand for diversity and inclusivit­y in cosmetics propelled halal cosmetic players. Muslims spent a total of $70bn on cosmetics in 2021, which is anticipate­d to increase to $93bn in 2025”

Muslim spend on food increased by 6.9 per cent to equal $1.27tn in 2021, and is forecast to reach $1.67tn by 2025.

Also, Muslim spend on travel was valued at $102bn in 2021 and is anticipate­d to reach $189bn by 2025, the report added. Muslim-friendly hotels and restaurant­s are also expected to record growth in the coming years. Indicating notable investment activity, HalalBooki­ secured $5m in preSeries B funding, while Pakistani travel startup FindMyAdve­nture raised $600,000. Meanwhile, Muslim consumers spent $100bn on pharmaceut­icals last year, which is expected to scale to $106bn this year and total $129bn in 2025. As much as $2bn in halal-related pharmaceut­ical investment­s were made in 2020/21. Abu Dhabibased ADQ acquired Egypt’s Amoun Pharmaceut­ical Company, while Malaysia’s MiCare received $30m in funding from the Internatio­nal Finance Corporatio­n. Simultaneo­usly, Muslim spend on fashion totalled $295bn in 2021, and is forecast to rise to $313bn in 2022, the report added. While modest fashion was garnering traction even prior to the Covid-19 pandemic, the key shift has been into e-commerce. Among notable collaborat­ions, Malaysian brands Mimpikita and CalaQisya partnered with Disney for their modest wear collection­s. Growing consumer demand for diversity and inclusivit­y in cosmetics propelled halal cosmetic players. Muslims spent a total of $70bn on cosmetics in 2021, which is anticipate­d to increase to $93bn in 2025, the study added.

Muslim spend on media and recreation also increased by 7.2 per cent in 2021 to equal $231bn. New mobile apps such as ImamConnec­t and Sango sprung up to cater to Muslim lifestyles, while digital advancemen­ts in the regional art scene were also witnessed. Last year, UAE-based Behnood Javaherpou­r launched the country’s first NFT (nonfungibl­e token) digital Islamic art agency.

However, Islamic finance was estimated to value $3.6tn in 2021 and is forecast to reach $4.9tn by 2025, the report added. Global sukuk issuance escalated to $250bn in 2021, according to the Institute of Internatio­nal Finance. Meanwhile, Nasdaq Dubai recorded $11.9bn in new sukuk listings last year.

With Muslim spend forecast to reach $2.8tn by 2025, growth across the Islamic economy space appears promising.

12 June 2022

 ?? Saod Mohammed Obaidalla, ?? EVP and head of Private Banking, Emirates NBD
Saod Mohammed Obaidalla, EVP and head of Private Banking, Emirates NBD
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