Berkeley Assets said poor returns, high administration fees and limited access to funds are the three main reasons IFAs in the UAE are subjected to heavy criticism by clients.
This blame, however, is often not the fault of IFAs, but rather lies in the limited supply of investment products made available in the market by offshore pension providers, Berkeley Assets said.
Blame misdirected
“When clients become upset with their IFAs, the reasons are always the same,” said Justin Quan, senior associate at Berkeley Assets in Dubai.
“They complain that they are paying too much in annual fees, can’t access their money for around 20 years, and their returns are so poor compared to the stock markets.
“But are IFAs to blame for recommending these expensive products to clients, when this is all the offshore pension providers allow IFAs to present to their clients? If a friend recommends a product to you, and there is a better alternative that they aren’t aware of, was it their fault?”
IFAs better than ever
Quan says IFAs are now better equipped than ever to deal with the growing demands of UAE investors based on their greater market awareness.
“We have all heard the horror stories about investments that have gone wrong, with the financial advisers getting all the blame, but there are good stories as well,” Quan said
“The top IFAs realise that the world has changed, and they are adapting their business models to put their clients first and avoid the expensive, poor performing products that have previously been forced upon them, as such they are demanding new and innovative solutions from alternative sources.
“The reason the good stories are rarely heard is that, while people are quick to speak out when results don’t go their way, they keep things to themselves when investments are performing well,” he said.
Volatile market
Quan says IFAs are now facing a major new challenge with global equity markets at an all-time high and are now experiencing significant levels of volatility.
“Beating the charges on your investment plan and securing above inflation growth could prove even harder for financial advisers to deliver,” says Quan.
“Expectations should be managed from the start. Investors need to sleep easy knowing that their hard earned money is growing, at above inflation rates, safely over short to medium terms,” he said.
