Kuala Lumpur, 24 March 2016 - A global survey on the Knowledge, Attitude and Practices (KAP) of the Global Islamic Wealth Management Industry conducted by Edbiz Consulting, a London-based think tank, revealed that the global Islamic wealth management industry is facing a trust deficit that is hampering the growth of the industry.
"48% of the respondents said they have never used any Islamic wealth management products and services, citing lack of understanding, lack of trust and preference to manage own wealth as reasons for not subscribing," said Dr Sofiza Azmi, Group CEO of HD-Edbiz Group of Companies. "This finding resonates with interviews conducted with more than 50 leading industry practitioners and experts. About 18% of them said that convincing Muslim HNWIs to invest in Sharia-compliant way is very difficult. There is certainly a trust deficit when it comes to managing wealth in a Shariah-compliant way," she added.
When it comes to seeking advice from professional wealth managers and financial advisors, about 21% of respondents said they prefer to manage their own wealth. This finding reflects the trust deficit issue that the industry is facing as well as the mindset of the new generation of young investors who prefer to do everything themselves. "Having grown up in a Do-It-Yourself world, Gen Y's sceptical view of the value of financial advice is the direct result of their belief that they can find this information more easily by themselves," explained Dr Sofiza Azmi. Wealth managers and financial advisors who are keen to tap into this growing affluent young investors must understand their desire for active participation, individual customization and experiential value.
Speaking at the 3rd MFPC International Conference on Islamic Wealth Management and Financial Planning on Wednesday, Dr Sofiza Azmi shared the results of the global survey to more than 300 people comprising wealth managers, financial planners, regulators and academicians. The global survey, which was conducted in collaboration with Labuan IBFC, aimed to identify the demand-supply gaps in the Islamic wealth management industry by assessing the level of knowledge and attitudes of working professionals towards Islamic wealth management services as well as current practices.
Quoting the recent Islamic Wealth Management Report 2016 published by Edbiz Consulting, Dr Sofiza Azmi highlighted that 40% of Islamic wealth is concentrated in non-Muslim countries with only a fraction of the estimated US$11.5 trillion worth of wealth owned by Muslim individuals, institutions and government is managed by Islamic financial institutions. According to the report about 73% of wealth in the MENA region is being channelled abroad to conventional asset managers, in jurisdictions such as Switzerland, Luxembourg and Dublin.
"The global Islamic wealth management industry is still facing capacity issue as risk appetite of Islamic investors, both institutional and individual, is consistent with product availability in the West," she explained. Hence, there is a critical need to not only enhance Islamic financial institution's wealth management capacity, but also diversifying the industry's product range in line with the increasingly sophisticated Islamic investors who are currently having to resort to conventional wealth management products that meet their risk appetite, said Dr Sofiza Azmi.
The international conference on Islamic wealth management also hosted a GIFA Award Commemoration Luncheon which was graced by the Deputy Minister of Finance Malaysia, Datuk Johari Abdul Ghani. Last year, the Malaysian Financial Planning Council was awarded the Best Islamic Finance Education Provider Award at the Global Islamic Finance Awards (GIFA) ceremony in Bahrain.
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Edbiz Consulting is a global Islamic finance think tank with offices in London, Istanbul and Islamabad. For more information, please visit: www.edbizconsulting.com. Edbiz Consulting provides multiple services that balance the dual purpose of developing thought leadership in this niche industry and strengthening the Islamic finance capacity for businesses and banks. Its client base is diverse and includes financial institutions, governments, education providers, established businesses and entrepreneurs.
To order a copy of the Islamic Wealth Management Report 2016, please do not hesitate to get in touch with Umar Rauf at urauf@edbizconsulting.com
© Press Release 2016
