Although the fortunes of high net worth individuals in the Middle East have dropped in recent times, and Dubai, the poster child of the region and former darling of property investors, has been hit hard by the downturn and has lost its shine, has the promised fortune of the GCC region disappeared completely for the expat private client professional?
With highly competitive compensation packages, tax free environment, a high standard of living, medical care and a wealthy target market, the GCC (Gulf Cooperative Council), and Dubai in particular, has been an attractive region to the expat professional. Despite the recent turbulent times, Dubai still remains the financial services hub for the GCC region, although, in the wake of recent negative press and redundancies, there is growing interest in the other emerging GCC states.
Qatar, although quieter than its neighbours, is certainly among the most robust in the GCC and its financial centre has been growing steadily over the past few years. With one of the fastest growing economies in the world, sound fundamentals, vast energy reserves and a supportive government, Qatar’s growth looks set to continue as global banking firms such as Barclays and HSBC commit to making senior appointments. With regard to employment law in Qatar, as per certain other states in the region, it can prove difficult for expatriate workers to transfer employer sponsorship. So should a position for whatever reason not work out, it can leave the employee in a predicament. This has made it difficult in some cases for firms to attract the best talent.
The neighbouring Kingdom of Saudi Arabia is an exciting market for the wealth management professional and has awesome potential. Saudi does however present challenges to firms in terms of finding and retaining the right people and challenges to the expat worker in terms of integrating into society. A deeply religious and conservative society, women must wear an Abaya and headscarf, are not allowed to drive and must obey strict rules which govern their behaviour and interaction between sexes. This can be a source of great frustration, and many prefer the more liberal environments of the UAE or Bahrain. That said, in spite of the downturn, a number of wealth management firms are hiring for the key Saudi market due to the increase in available talent today.
Expats in Bahrain, a long established banking centre in the region, continue to enjoy an excellent quality of life, low key and relaxed, with a good mix of local and international culture. Specific trust legislation recently enacted by the Central Bank and the arrival of leading firms such as Ogier is helping its growth as a new jurisdiction for trust services. According to a Bahrain-based family office specialist, he loves the 20 minute commute home to his waterfront villa complete with boat dock. ’There’s no boat there yet but I’m working on it, and it won’t be long!’
In the UAE, Abu Dhabi has stayed the course and has a steadily growing economy, with more and more commuters from their recently bailed out cousin, Dubai. Abu Dhabi has the potential to be a great place to live and work although they are taking their time with the development of the city and facilities, another lesson learnt from observing Dubai’s rapid rise and subsequent fall. In Dubai, getting a table in a restaurant on a Thursday (the start of the weekend) is easier now than it was 18 months ago, and although prices remain high, with an increased pool of candidates, it is now an employer’s market. Strong local players such as Emirates NBD, formed through the merger of Emirates Bank International and National Bank of Dubai in 2007 – now the largest bank in the GCC by assets – have undergone robust hiring in 2009 in addition to hiring some senior international talent at executive management level. International firms such as Standard Chartered and Barclays Wealth continue to demonstrate a strong commitment to the region by building their teams.
The GCC has proven itself to be a somewhat transient market, where young professionals come to accelerate their career, earn tax free income and enjoy a good social life for 2-3 years. The market has also been highly competitive and aggressive with poaching and ever rising compensation packages. For employers this combination has made it difficult to get traction as there has been a constant turnover in staff.
In these post downturn times, the picture looks different – four or five years ago there were many Western employees, hired in the main to establish operations, though a large number have now moved to other jurisdictions or been repatriated. Qualified expat Western employees are, as a general rule, more expensive than any others, and have been susceptible to culling in the workforce, even by international banks and associated professional services firms.
The GCC region has long relied on qualified and experienced expatriate talent, and there is still a premium on grey hair, gravitas and a network, though there are now a burgeoning number of initiatives in place to ’localize’ the workforce, eventually succeeding them with skilled locals. The job market for experienced trust and banking personnel does exist however although employers are doing ’more with less’ and looking to their existing employees to deliver more before committing to higher staff levels.
Kuwait has introduced term limits to how long expat professionals can remain in-country and Dubai has introduced strict policies to ’Emiratize’ the workforce where possible. These initiatives have filtered through to a number of firms where they now have graduate training programmes in place to nurture local talent. There are also stricter visa restrictions limiting the amount of time expats can spend outside of the UAE and expect to re-enter. These developments may well have a negative effect on attracting career-minded talent to the region.
Although remuneration is highly competitive in the region, it would seem that the recent trend toward driving down expat pay has been successful. Previously, expats with a specific profile could enjoy very attractive sign-on, salary, benefits and bonuses, in addition to a sizeable annual pay rise. Today’s expat from the UK or Europe anticipating an astronomic compensation and benefits package will however be mildly disappointed, as these packages are now the exception rather than the rule. Indeed, recent packages have, in some cases, been slashed by as much as 30%-50%. That is not to say that the available positions are underpaid, rather the rapidly escalating packages of recent years have been arrested. The region does remain competitive in terms of pay, largely due to it being a tax-free environment.
With the cutbacks of recent times across the local, regional and international markets, there is now a lot of talent available – in certain key areas however, there is still a lack of supply of true talent, especially in private banking. The excessive wage inflation in private banking over the last 5 years, caused by firms poaching each others staff, has damaged the industry and led to diminishing returns – the focus is now on recruiting proven relationship managers and tying them in to longer-term deals, in addition to growing talent organically in-house from the ground up.
For the individual or business wanting to make a splash in the GCC market, there is a need to be visible and committed to the region. Large international firms now recognise that they have to put people on the ground instead of flying them in to market their services. ’The GCC market is naturally suspicious of ’suitcase’ bankers and will want to meet and understand your offering several times before doing business’ says the head of a private bank in Abu Dhabi, ’In order to be successful here, you need to have a local office and have longevity within the market. When visiting the country, few [local] people will agree to a meeting before you actually touchdown’.
In the words of another wealth manager in the UAE: ’Any professional seeking to move to the Middle East needs to understand that the keys to success in living and working here are adaptability and diversity. Being able to embrace diversity of culture, people, business practices and to adapt to these challenges and opportunities will make all the difference to whether they are successful here or back on the plane within 6 months!’
For further information email nick.careless@ap-executive.com
Nick Careless is Managing Director of AP Executive, a specialist global private wealth management recruitment consultancy
Article first published in Private Client Practitioner magazine, December 2009