Wealth Management in Dubai

Contents

According to Vanguard, professional wealth management adds value to investors’ bottom lines in 5 ways:

Cost effective implementation (benefit up to 0.3% per year)

This refers to choosing low-cost funds, reducing purchase transactions and investing in a manner that reduces taxable consequences. In fact, investors repatriating to the UK from a tax-free jurisdiction such as the UAE might be able to double or triple this estimate, based on how intelligently an adviser can repatriate their assets.

Effective rebalancing (benefit up to 0.14% per year)

You might think Vanguard misleads investors when suggesting that rebalancing provides a wealth benefit. After all, if someone chooses an allocation that’s 60 percent in stocks and 40 percent in bonds, they’ll make more money over time if they never rebalance it. That’s because the portfolio would gradually shift to a higher allocation of stocks.

But Vanguard’s point is that by maintaining a target allocation, investors are more likely to stay calm when stocks drop - how an allocation performs, and how investors perform with that specific allocation, are typically two different things.

Behavioural coaching (benefit up to 2% per year)

Every time you as an investor turn on the television, goes online, listens to market-based news or hears a colleague boasting about his big gains, you're at risk. When DIY investors hear such noise, they can react to it quickly. But investors with the right kind of financial adviser have a guardian at their gate.

That doesn’t mean the adviser will get the investor in a headlock, wrestle them to the ground and smack them with common sense. But when investors must speak to an advisor before making an investment change, there’s an opportunity for help. The adviser could convince them to back away from the cliffs of speculation.

Asset allocation (up to 0.6% per year)

This refers to how investments are divided into taxable and tax-advantaged accounts. Expats in the UAE don’t need to worry about this, until they repatriate. But once they do, they’re often fresh meat for the taxman if they don’t have savvy help.

Spending strategy (up to 1.2% per year)

You’ve likely heard of the 4 percent rule. This is how much retirees can afford to sell each year, while giving them solid odds that they won’t run out of money. But how could you make this flexible, during market down years? And could you withdraw more?

Then there’s the question of what to sell, and when. If you’ve retired to a taxable jurisdiction, should you sell assets from your tax-advantaged accounts first?

Offshore investment & international diversification

Successful investing means not only capturing risks that generate expected return but reducing risks that do not. Avoidable risks include holding too few securities.

Diversification is the antidote to all these risks as it washes out the randomness of returns of individual companies, sectors and markets and positions the portfolio to capture the returns of broad economic factors.

Most UK expat investors have habitually over-weighted the UK equity holdings in their portfolios due to familiarity bias, but does this make sense in a world where the UK only represents less than 10% of the world’s market capitalisation.

Diversification helps take the guesswork out of investing. You never know which markets will outperform from year to year.

By holding a globally diversified portfolio, expat investors are positioned to capture returns wherever they occur, and a well-diversified portfolio can provide the opportunity for a more stable outcome than a single security.