Self-Directed Management Gains Traction in the Middle East

 Middle Eastern investors increasingly favour self-directed wealth management, driven by higher expectations, specific product demands, and a preference for local firms.

FREMONT, CA: The investment landscape in the Middle East is undergoing a major shift. The region is shifting from traditional investment strategies towards comprehensive, self-directed solutions as a younger, affluent demographic seeks more control over their investments.

Setting the stage for a big change, this change is driven by a growing interest in digital assets, a rising demand for digital offerings, and a general dissatisfaction with current wealth managers.

Studies reveal a notable discrepancy between the services regional wealth managers provide and the expectations of Middle Eastern investors who are not very wealthy. Remarkably, contrary to the loyalty typically seen in Asia, 41 per cent of investors in the region have been with their current manager for less than three years, and 38 per cent of investors in the region plan to switch wealth managers within the next year. Despite this, most Middle Eastern investors prefer domestic companies over foreign ones, giving domestic businesses a competitive edge. Local businesses may be able to retain more clients if they concentrate on digital solutions and self-directed investment platforms.

Over 75 per cent of Gen Z investors prefer to handle their finances independently, demonstrating the changing preferences of this generation of investors. Investors in the Middle East are willing to accept online, round-the-clock investment solutions, demonstrating their clear demand for digital options. With 12 per cent of investors currently holding digital assets and 57 per cent intending to invest in the upcoming year, it is clear that interest in digital assets—aside from cryptocurrencies—is growing.

ESG investments are also becoming more popular, though there is thought to be space for improvement in the calibre of guidance offered on these products, especially in more traditional areas such as Saudi Arabia. An increasing number of investors are using ESG products, pointing to a trend in the direction of socially conscious investing. Wealth managers in the Middle East may need digital tools like fund screeners and ESG analytics to empower investors to stay competitive as consumer preferences change.

In this era of change, those who successfully navigate the intersection of financial independence, digital transformation, and sustainability will emerge as leaders in the dynamic Middle Eastern wealth management landscape.