The majority of HNWIs in the Middle East do not have a wealth succession plan for their family businesses

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  • Out of 300 established HNWIs in the Middle East, nearly 90% believe their family business is poised to efficiently transfer wealth to the next generation. Yet only 24% have a complete estate plan.
  • Having a succession plan that conforms to Sharia principles is important to more than two-thirds of respondents, and of particular importance to older and wealthier respondents.
  • Nine out of ten HNWIs hold their wealth in the Middle East and expect to do so in the years to come. However, almost a quarter of those surveyed are reconsidering the geographic positioning of their family business.

Dubai: Lombard Odier, a leading global wealth manager with 50 years of experience in the Middle East providing wealth planning solutions, today announced the results of the second installment of its Middle East Investment Survey, focused on succession planning at high-net firms concentrated -Worth Individuals (HNWIs) in the region. Key findings indicate that HNWIs understand the importance of effective succession planning, but there is less certainty that affluent families have implemented the succession plans needed to meet the diverse needs of their complex family structures.

Given the enormous economic contribution of family businesses in the Middle East, strong family governance is critical to the region’s continued economic success. However, while 87% of the 300 HNWIs surveyed believe their family business is structured to allow for efficient transfer of wealth between generations, only 24% say they already have an estate plan for all of their private wealth. The difference between younger and older entrepreneurs is significant. Over half of older respondents (55%) say they have a full estate plan, compared to just 9% of younger respondents. Conversely, more than a third of younger respondents (36%) do not have an estate plan at all but are interested in it, while another 26% expressed no interest. The remaining respondents have a partial estate plan.

In a region where family is the dominant social institution, the wealth of HNW individuals is often intertwined with their family business, its leadership, and Islamic values. This family governance issue reveals a disconnect between younger and older HNWIs: 66% of older business owners said they have a formal and rigid system of governance compared to 50% of younger respondents. Younger HNWIs also show a greater level of openness to change: almost half (45% versus 28% of older respondents) say they have a formal and flexible system of governance that evolves over time to reflect values to reflect her family.

A lesser degree of divergence is found in HNWIs’ views on Islamic values. Having a succession plan that conforms to Sharia principles is important to two-thirds (67%) of respondents, with a bias toward older respondents (74% vs. 62% younger respondents). It was also found that this increases with wealth: 79% of those with wealth greater than $10 million say Sharia principles are important to them, versus 61% of those with wealth between $1 million US dollars and 3 million US dollars.

However, there was consensus among respondents about the geographic distribution of family wealth. The overwhelming majority (90%) intend to keep their wealth in the region for the foreseeable future.

Arnaud Leclercq, Partner Holding Privé and Head of New Markets at Lombard Odier, commented on the results:

The results of our survey reveal several important factors in the area of ​​succession planning among HNWIs in the Middle East. The main consensus among them is that the passing of wealth between generations is of great importance, but there is also a lack of estate planning among both older and younger respondents. However, the results on geographic asset placement are encouraging as the majority of respondents plan to maintain their assets in the region, positively reflecting the investment environment in the Middle East. At Lombard Odier, we will continue to encourage high net worth individuals to prepare for their family’s future by providing bespoke wealth planning solutions aligned to their specific goals. As demonstrated by our 50-year heritage in the region, we have an ongoing commitment to providing trusted banking and wealth planning solutions to families across the Middle East.”

The full report is available on Lombard Odier’s Insights page.

This report is the second in our four-part Middle East Investor Views 2022 survey. The survey included 300 high net worth (HNW) investors and business owners from the United Arab Emirates, Saudi Arabia, Kuwait, Oman, Qatar, Bahrain, Egypt and Lebanon, and respondents included both younger investors (aged 18 to 40 years) as well as investors of the older generation (from 40 years). Topics include: how Islamic values ​​guide planning decisions, family governance and the internationalization of wealth.

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About Lombard Odier

Lombard Odier is a global wealth and wealth manager and a leader in sustainable investing. For over 225 years and through more than 40 financial crises, the group has combined innovation and prudence to align with the long-term interests of private and institutional clients. The Group is wholly owned by its Managing Partners and has a strong, liquid and conservatively invested balance sheet with a CET1 ratio of 28.5% and a Fitch rating of AA-.

Lombard Odier offers a full range of wealth services, including succession planning, discretionary and advisory portfolio management and custody. Asset management services are provided by Lombard Odier Investment Managers (LOIM). The group has created state-of-the-art banking technology, which is also used by other Swiss and European private banks and financial institutions.

As of December 31, 2021, the group had total client assets of CHF 358 billion. The group has had its headquarters in Geneva since 1796, had 26 branches in 21 countries at the end of December and employed 2,650 people.

For more information: www.lombardodier.com
Lombard Odier Group
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1204 Geneva – Switzerland
www.lombardodier.com
Andreas Kessler
Media Relations
[email protected]
Sabine Kraus
Media Relations
[email protected]

Important information

This media release was prepared by Bank Lombard Odier & Co AG, a bank and securities dealer (hereinafter «Lombard Odier») authorized and supervised by the Swiss Financial Market Supervisory Authority (FINMA). It is not intended for distribution, publication or use in any jurisdiction in which such distribution, publication or use would be unlawful, nor is it directed to any person or entity to whom it would be unlawful to address such document. This media release is for informational purposes only. It does not constitute an offer or a recommendation to enter into a business relationship with Lombard Odier or to subscribe for, buy, sell or hold any securities or financial instruments.

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