Family offices are investing in sophisticated operational infrastructure and long-term employee compensation schemes to bolster competitiveness.
Dubai, 31 August 2023: In the UAE, financial wealth, generated by ultra-high-net-worth individuals and family offices is forecasted to increase to 46% by 2026. It is estimated that the overall UAE’s financial wealth will continue to grow at a compounded annual rate of 6.7% and reach USD 1 trillion by 2026. This is according to the findings of the ‘2023 Global Family Office Compensation Benchmark Report’ by KPMG and Agreus.
With the UAE’s rise in the establishment of new family offices, wealthy families from around the world have recognized the country’s appeal as a destination for their offices stemming from its combination of tax advantages, strategic location, robust financial services sector, and high-quality lifestyle amenities.
The report surveyed the views of family office chief executive officers, managing directors and staff to analyze succession planning, social mobility, and governance structures. It found that global family offices plan to diversify away from risky areas and invest in traditional, safe arenas where track records have already been achieved. This includes decentralizing risk by spreading investments across multiple areas with high return. Crypto – a burgeoning area of interest in the UAE – could play a small role in global family office portfolios as CEOs and MDs explore it.
The report found that family office leaders in the region are aggressively pursuing strategies to grow their wealth and reputation. Nearly half (47%) of all family offices in the UAE also have a succession plan in place, while 30% of UAE CEOs are also able to earn more than 50% of their salary as an additional bonus. The report also indicated a strain on recruiting talent for family offices in 2022, leading to a standardization to compensation with long term incentives and a structured approach to recruitment.
In the UAE, family businesses remain very competitive buoyed by initiatives by the government to support them as they recognize their role in accelerating the growth of the national economy. In recent months, UAE has rolled out numerous programmes, initiatives, and regulations, all designed to support the evolution and growth of the family business. A new set of governance guidelines issued by the UAE aims to assist family businesses in establishing effective governance and facilitate a smooth succession, ensuring business continuity.
Raajeev B Batra Partner and Head of Private Enterprise at KPMG Lower Gulf, said: “Middle East family offices are approaching 2023 with an educated outlook. Previously many family offices focused heavily on investments and less on having a robust sophisticated operational infrastructure, but this trend has changed. The regulatory framework in the UAE more specifically has been a significant driver in attracting family offices to set up in the country.”
Tayyab Mohamed, Co-Founder of Agreus, said: “The contribution of family-owned businesses in the region cannot be stressed enough. They continue to remain a crucial part of the economy, with the UAE and KSA rapidly rising within this space. With the recent initiative by the DIFC to create the Global Family Business and Private Wealth Centre, we believe the Middle East is very competitively placed to be a hub for family offices in the future.”
The report also found that UHNW families are increasingly introducing employee participation schemes like profit sharing, rise in B corps and interest in employee ownership trusts, whereas on the personal side, family offices are devising professional compensation structures that incentivize excellence and ensure longevity in their new hires.
About KPMG International Limited
KPMG is a global organization of independent professional services firms providing Audit, Tax and Advisory services. We operate in 147 countries and territories and have more than 219,000 people working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients. For more detail about our structure, please visit http://kpmg.com/governance
Agreus Group is a full-service resources and recruitment consultancy dedicated to working exclusively with Family Offices throughout the world. We offer a bespoke and tailored service which unlike others isn’t focused on specialism or industry but rather, tailored to each Family Office. We specialise in placing entry-level through to executive-level professionals within Investments, Legal, Accountancy and Finance and Operational roles. Our sole purpose is to find an effective solution to the people-problems faced by Family Offices globally and since founding more than a 13 years ago, we have become an established presence in the United Kingdom, Europe, United States of America, Asia Pacific and Middle East. Our experience has given us unique access to primary data and intelligence within the Family Office space and enabled us to be an authoritative voice as a Family Office thought leader. http://www.agreusgroup.com/
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