Jersey Finance launches landmark study on the global attitudes to Islamic wealth management
Jersey Finance launched a significant report into the attitudes towards the Islamic finance wealth management market by Muslim high and ultra-high net worth individuals (HNWIs and UHNWIs) in collaboration with Gateway Global. The report investigates the views of Muslim family offices, HNWIs and UHNWIs regarding Shari’a-compliant and ethical wealth management services, current and future demand for investment products, and attitudes towards choice of investment jurisdiction, ethical investment values, wealth managers, tax, succession planning and philanthropy.
Islamic wealth management remains a sector of the financial services industry with significant unrealised potential. While in the past two decades, international investment banks structured and launched increasingly sophisticated Shari’a-compliant financial instruments for distribution by private and retail banks, in more recent years the innovation that was previously a driving factor in the growth of the market has slowed. As a result, even though demand for Islamic private wealth management services has not diminished, the Islamic finance market is restricted on the offer side for Islamic products and services.
However, there is now increasing evidence that the supply side is beginning to see a resurgence of Islamic finance activity. Not only are intermediaries – particularly fintech firms – beginning to address the product gap, but also regulators, IFCs and other market stakeholders have recognised the gap and are addressing relevant policy and infrastructure issues. Furthermore, socially responsible investing (SRI) and the trend towards products offering environmental, social and governance (ESG) standards are among the drivers of increasing demand for Shari’a-compliant wealth management solutions. This trend has made Shari’a-compliant products and services more accessible to all classes of investors, while enhancing their attractiveness, especially for those looking for a social return on their investments. In particular, these attract the tech-savvy, ESG conscious ‘NexGen’ population.
Launching the report, Faizal Bhana, Director for Middle East, Africa and India, Jersey Finance said: “This study provides unique insights into the evolving needs of Muslim high net worth individuals, and highlights what private wealth managers, financial services providers and international jurisdictions need to do in order to meet those needs. Jersey already has great relationships Africa and a wealth of experience in Shar’ia compliance, succession planning and asset protection, placing us in the top rank for jurisdictions supporting the needs of Muslims.”
Key findings of the ‘Global Attitudes to Islamic Wealth Management’ report include:
– 96% of Muslim HNWIs are actively planning or preparing for wealth succession, with more than half (57%) planning to seek tax advice, and nearly two-thirds (63%) seeking Shari’a compliance advice
– The Islamic finance investor base is becoming ever more sophisticated, demanding greater professionalism from financial service providers, while continuing to adhere to Shar’ia principles
– HNWIs are taking an active interest in ESG and ethics in making financial decisions yet more than half rely on their own knowledge to do so, presenting an opportunity for private wealth managers to offer more advice and a codified approach to ethical finance
– Venture capital is becoming an increasingly important staple asset class for Muslim HNWI investors who take a keen interest in early-stage high-growth opportunities in fintech and the digital economy
– Crypto and digital assets are polarising opinion with a significant minority (21%) believing this asset class to be of high importance in the future, while a majority (66%) give it the same or high importance in the future, but debate in the industry continues on the Shar’ia compliance of cryptocurrency
– The UK continues to rank as the main staple jurisdiction for Muslim HNWI investors thanks to its legal framework, superior property rights, and inherent compatibility with Islamic law, including for financial transactions and wealth succession. Jeresy is favored by Muslim HNW families and family offices for these services, especially investment trusts
The report compiles attitudes to private wealth, fiduciary planning and succession by Muslim families, taking into account the views of more than 2,000 respondents across key markets in the UK, Asia, the Middle East and Africa.