Muscat: The Sultanate of Oman’s financial wealth grew by a Compound Annual Growth Rate (CAGR) of 3.8 per cent annually from 2015 to reach a high of $64 billion in 2020 – 49 per cent of which is investable wealth – as the Sultanate’s market showed resilience in the face of the protracted COVID-19 pandemic, according to a new report by Boston Consulting Group (BCG).
The report, titled ‘Global Wealth 2021: When Clients Take the Lead’, reveals that despite the pandemic’s enduring financial impact, global prosperity and wealth grew significantly throughout the crisis and are likely to continue to expand significantly over the next five years, in line with the emerging economic recovery.
“The Sultanate of Oman’s wealth has been favorable over the past five years, demonstrating resilience despite pandemic-related tailwinds, with economic productivity accelerating as per Oman Vision 2040 aspirations. Activities in this direction have encouraged Omani citizens to engage in the global economy, which has, in turn, driven sustained increases in wealth growth,” said Mustafa Bosca, Managing Director and Partner at Boston Consulting Group.
Oman, which represented 3 per cent of the Gulf Cooperation Council’s (GCC) financial wealth in 2020, is expected to witness strong growth of 5 per cent CAGR to reach $82 billion by 2025, an $18 billion increase from 2020. Meanwhile, the region’s financial wealth is forecast to reach $2.7 trillion in 2025 from $2.2 trillion in 2020.
A spotlight on onshore asset allocation shows that equities and investment funds (55 per cent) accounted for the largest proportion of assets in 2020. Looking ahead, the allocation of onshore assets is expected to be similar with equities and investment funds expected to be the largest share of onshore assets in the Sultanate, amounting to 54 per cent.
Changing landscape of the wealthy in Oman
BCG’s report also shows Oman’s changing landscape of the wealthy in the coming years, with the rise of the next-generation affluent and high-net-worth clients. These individuals, between 20 and 50 years of age, have longer investment horizons, a greater appetite for risk, and often a desire to use their wealth to create positive societal impact as well as earn solid returns. Many wealth managers are not yet ready to serve these new clients.
“Greater economic attainment is a primary driver behind the Sultanate’s increased wealth. Looking ahead, wealth demographics will continue to shift, facilitating a subsequent shift in client needs and expectations which compels local wealth managers to ensure their offerings are geared towards local needs or younger wealth segments,” concluded Bosca.
To win the new segment of the next-generation segment, wealth managers must bring a bold and new digital business model to life. The five pillars of the new digital model include:
Supercharged relationship management: All of the legwork is done with the use of technology and relationship management to become the key support in the digital conversion funnel
Contextual and consumable learning: Streamlined, gamified, 100 per cent digital content, placed strategically to nudge conversion
Smarter user and experience design: Simple to use platforms, enriched with tools and simulators that clients can play with
Simplified pricing: Hybrid model combining asset-based pricing with flat subscription fees
Democratised access to "Haute" investments: Customisable discretionary mandates, and scale-down of (U) HNWI products