Holborn Assets say Mohammed Al Balooshi could be the first Emirati to train as an independent financial adviser with a private wealth management company.
Once a UAE military officer, now looking to offer a wealth of financial advice
Mohammad Al Balooshi is training to become an independent financial adviser (IFA) at a private wealth management company. The 30-year-old who worked as a military officer before deciding to try the financial services industry, joined Holborn Assets in March under the mentorship of Vince Truong, a partner at the advisory firm. The company says the Emirati could be the first in his community to become an IFA for a private firm.
Mr Al Balooshi is studying to attain his Level 4 International Certificate in Advanced Wealth Management from the Chartered Institute for Securities and Investment (CISI), with hopes he will one day work as an independent adviser for the firm. In the meantime, he secures new business from the Emirati community.
“We see him as a paid intern being educated to be an adviser, but he’s not ready to give advice,’"said Mr Truong. “He and I work on clients that he introduces together and I mentor/train him. He won’t be ready to work independently for a few years. Our goal is to get him to the point of being a competent, professional advisor. That partially includes the academic knowledge but more importantly, the actual practitioner’s knowledge.”
Holborn Assets has about 80 advisers of which two, including Mr Truong, are on a fee-based structure charging 1 to 1.2 per cent per annum of assets under management.
The industry is currently going through an overhaul after the UAE Insurance Authority proposed a raft of new regulations following complaints from consumers about poor advice, specifically with regards to fixed-term investment plans. The new rules will offer investors better protection and change the way savings, investment and life insurance products are sold in the UAE. This will include limits on the upfront commission advisers can earn from some product providers. Here Mr Al Balooshi discusses his entry into the sector and offers his insight on how Emiratis like to invest:
Why did you decide to go into the financial services industry?
I was a military officer at Zabeel palace for 11 years. My job was to meet high level management or big investors that came to visit for business or regular meetings. I started noticing all these investors and thought 'what do they have that I don’t?' This attracted me to the financial markets; something in my heart told me to go to the banking industry. It was a big adventure, a risk even because I had a government job and I was changing it to banking. But the more risk you take, the more you get.
How did you make the switch?
I joined Mashreq three years ago. During that time I represented the bank in front of Dubai Police and at the Careers Fair in 2016, talking about our Emiratisiation, our business and how we're helping the economy of Dubai. I also represented the bank at Dubai Court to develop the relationship and services between the bank and the courts.
What was your role at Mashreq?
I was a relationship manager for the wealth management team. There were 31 relationship managers. I was the only local in the department as most locals are generally branch managers. When I joined, I brought in big investors. When the management saw I was bringing in big investors, they moved me to the wealth management division. My job there was to bring in clients and because most of the relationship managers were not local but the investors were, I would join to support them in meetings.
Why the move to Holborn Assets?
I got to know Vince through LinkedIn. I was successful at Mashreq but I wanted to learn and do more; to be a 100 per cent professional manager. We offer services to my community such as free financial education. We have a meeting on this with Dubai Police this week and we also want to go into schools and universities.
Why is financial education necessary?
In our society, when the young generation finish school, 40 per cent of them just want to work rather than go to university. Once they have joined a company or the government, they need a car so they take a loan from the bank. They don’t have a culture of saving or how to handle their money and plan for their future. Vince and I are offering lectures to the young generation on financial literacy and managing your money. I also discuss these issues at the Majlis. Ramadan was my best chance to explain to my own society what we are doing. At Holborn we do asset management; if you give us Dh100,000 or Dh1 million, we can get you 10 to 12 per cent on a yearly basis.
If you put Dh1m in your bank account, you might get 1 per cent. But if you put it into a fixed deposit you might get 2 per cent if you deposit it for five years. Here, we take your money and manage it on our platform; we put it into bonds, securities, real estate and the financial markets. So every six months you will get 6 per cent.
Isn't promising annual returns of 10 to 12 per cent risky?
If our clients did not get this percentage nobody would invest a single dirham. The number of our clients is increasing. They keep coming. Even if the market is down, there is a way to get your profit.
Why would this be attractive to Emiratis?
We manage more than US$40m and in the last two months I am getting locals to get into this. Unfortunately there are Ponzi schemes in the market. There are companies that are not professional and just take people’s money promising to double their money. Many Emiratis have been affected by this but we focus on trust before sales.
Are you advising people directly?
I advise people on securities and I bring in local clients from different cities but mostly Dubai. Once they come in, they ask me questions about securities so I ask Vince to be with me. Then they sign an agreement with us – so I am like the middleman. I have not sold anything yet as I am still studying for my CISI exam, which is on August 1. This will enable me to carry out wealth management so then I can be accepted by any bank or financial institution. I also visit clients with Vince – sometimes the experience is better than studying.
What do Emiratis typically invest in?
Real estate. But then the crisis happened and now many would never consider putting their money anywhere other than the bank. Why? Because a lot of local people, and I am one of them, invested in real estate and then a lot of developers ran away. Back then, there were no escrow accounts and people lost millions. After this the government introduced the escrow account.
So is property still a popular option?
Yes but Emiratis will only buy ready built properties now, not off-plan. The older generation like fixed deposits - they don’t want the headache. They will say ‘my money is in the bank so leave it there’. But I am trying to change this idea. When you get a property your return will be a maximum 8 to 10 per cent return. You buy it at Dh400,000 and you will get Dh40,000 in rent. At Holborn, there are investment options where the capital is guaranteed – and there are options where it is not guaranteed – it’s up to you.
So how are you approaching your community?
I’m trying to build trust with Emiratis – I’m not saying come and buy this product, I’m saying come and we will give you an education on how to save your money, then you can decide. I'm not just focusing on my friends and my cousins, I am trying to get an advantage by telling people that we are giving them a free education. I am going to the government directly - where I hold a seminar to tell them what we are doing and based on that I might get 100 to 200 clients.
Many UAE residents have invested via financial advisers and lost a lot of money. Why should they trust you?
We are getting more and more clients. Every week I have 14 meetings. But if people have been mis-sold products, this will affect us because the trust has gone. With the Insurance Authority’s (IA) regulations, everyone should be changing to a fee-based structure. People have a 100 per cent right to complain if they are losing their money. Anyone who gives money based on an adviser’s suggestion and loses, the adviser should be punished and should repay the money because the person who gave the money is the owner. He is coming to increase his money, so if he trusts us, we should increase his money.
Are you fee-based?
I would never be based on commission. I chose to be fee-based. There is the option to work on commission but the (IA) will end this. This is a good thing. Suppose I receive a commission and then I lost the money and meet the person outside and I am with my family; I would not like to be in that position.
What sort of products do Emiratis invest in via you?
If you are convincing them not to buy property then they need something guaranteed. So the preference is a lump sum investment for three or five years with a 6 per cent return, where the principle is guaranteed. I am also speaking to a government organisation, suggesting we deduct 1 to 2 per cent of each staff member's salary on a yearly basis and we will give them a plan to make more money. I want an agreement that makes sure they have a right to a penalty; so if we lose their money we have to give at least 50 to 70 per cent of the principle. But I prefer a guaranteed investment plan; it is better for us and better for the staff – this is the only way.
What do you invest in?
I invest in gold and I have my own companies in contracting, maintenance and cleaning services. For the gold, my partner is an Egyptian. We buy gold and store it in a warehouse and we share the profits 50/50. We buy low and sell when the price goes easy; you get the margin if you have a huge amount.
What does your family feel about your new career?
I have seven brothers and one sister. All my brothers work in the military, the police and immigration and I when I first left they said: ‘are you serious? People dream of this position and you are quitting'. But now they feel more comfortable and think I am on a good track.