In the dynamic and evolving landscape of Islamic wealth management, contemporary studies have provided deeper insights into how Muslims approach financial stewardship in accordance with Islamic principles. The latest report by Jersey Finance, a leader in representing the globally acclaimed International Finance Center in Jersey, sheds light on the current sentiments and practices in Islamic finance wealth management.
This comprehensive study gathered insights from over 2,000 key stakeholders in the private wealth sector, including notable regions like Kuala Lumpur. It reveals significant trends and preferences within the Islamic finance domain, particularly in renowned trust jurisdictions such as Kuala Lumpur, Jersey, and other major International Finance Centers (IFCs).
Key findings of the report highlight the challenges and priorities of Muslim High Net Worth Individuals (HNWIs) globally. These include the critical process of wealth transition across generations, an increasing emphasis on sustainable finance, and the necessity for robust corporate governance.
Faizal Bhana, Director for the Middle East, Africa, and India at Jersey Finance, emphasizes the study’s role in understanding the evolving needs of Muslim HNWIs. He notes the significant trend of exploring trusts for succession planning, with 76% of respondents showing interest in this area. As the global economy recovers post-pandemic, there is a heightened need for long-term financial and wealth management strategies. Jersey and Malaysia, with their expertise in Shar’ia compliance and succession planning, are poised to meet these needs, thus reinforcing their status as top jurisdictions for supporting the international demands of Muslim family offices and HNWIs.
Recent Trends in Islamic Wealth Management:
- Wealth Succession Planning: A remarkable 96% of Muslim HNWIs are actively engaged in or preparing for wealth succession. Over half (57%) seek tax advice, and approximately two-thirds (63%) look for guidance on Shari’a compliance.
- Sophisticated Investor Base: There’s an increasing demand for professionalism from financial service providers, with a strong adherence to Sharia principles among Islamic finance investors.
- ESG and Ethical Financial Decisions: Islamic HNWIs show a keen interest in ESG (Environmental, Social, and Governance) factors. However, there’s a gap in knowledge, presenting opportunities for wealth managers to offer more structured ethical finance advice.
- Venture Capital and Digital Economy: Venture Capital, especially in fintech and the digital economy, is gaining traction among Muslim HNWI investors. This is particularly evident in regions like the GCC (Gulf Cooperation Council).
- Cryptocurrency and Digital Assets: The stance on crypto and digital assets is divided, with a significant majority foreseeing its growing importance. However, the Sharia compliance of cryptocurrencies remains a topic of debate.
- UK and Jersey as Preferred Jurisdictions: The UK, known for its legal framework and compatibility with Islamic law, continues to be a prime location for Muslim HNWI investors. Jersey is also a favored destination, particularly for investment trusts.
- Islamic Finance and ESG in Malaysia: Malaysia is witnessing a convergence of Islamic finance principles with ESG, indicating a shift towards more responsible and inclusive investing among HNWI investors.
The report, encompassing views from key markets such as the UK (London), Asia (Kuala Lumpur), the GCC, and Africa (South Africa), serves as a critical resource for understanding the preferences and planning approaches of Muslim families regarding private wealth, fiduciary planning, and succession. These insights are invaluable for investors seeking to make informed and strategic decisions in their comprehensive financial planning.