Thursday 28 Mar 2024
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The local Islamic finance industry needs to come up with more investment and takaful products that cater for Muslim high net worth individuals (HNWIs), says an industry expert.

According to Amanie Advisors executive chairman Datuk Dr Mohd Daud Bakar, there have been too much focus on traditional financial products such as will writing and asset inheritance.

"This is good. But from a practical point of view, they add no value to the market. We have these [types of products] already, and by managing what we already have is not adding value to the community.

"We have to see products beyond will [writing] and [asset] inheritance," he said during the Wealth Management for Managers Conference on June 16 that was organised by the Labuan International Business and Financial Centre.

Mohd Daud said that while Malaysia has come up with Islamic feeder funds and trust (wakaf), which offers the Muslim community other investment options, the incompetence of some global fund managers have failed to provide good returns.

"The [funds' poor] performance has caused the products to be marginalised in the market. The capability of the fund manager to put in place a sophisticated investment strategy [is important], in order to give good expected returns for investors."

There needs to be more takaful products that have a higher payout upon maturity, said Mohd Daud. "In the past, we saw [investment-linked] takaful products, which is the closest to Islamic wealth management, which people can invest for their children's education and benefit from the investments.

"While [payouts can range between] RM300,000 and RM1 million, HNWIs are looking for [returns] that can give them RM5 million to RM10 million upon the death of the holder. There's none in the market today."

Players in the Islamic finance industry should also find ways to 'Islamise' the many existing conventional wealth management products, which have good thinking processes behind them, Mohd Daud said.

"We should try to 'Islamise' these products rather than trying to invent our own. This way, things can be done cheaper and faster. It is good enough if we can have three out of every 10 [wealth management products in the conventional space]," he added.

Islamic foundations also have to evolve to create more incentives and become more transparent and attractive to Muslim HNWIs who are involved in philanthropy, said Mohd Daud.

"For instance, they should come up with a system to trace the capital spent and to measure the impact of it. We have to add more value in terms of impact measurement.

"By doing this, the philanthropists would be more willing [to set up a foundation and] to give — because they want to see the impact."

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