Although there has been increased interest in Islamic wealth management lately, an authority on this segment of the financial world says there has been excessive focus on wealth accumulation at the expense of more important issues.
This article exploring views about Islamic private banking introduces a new member of the editorial team for WealthBriefingAsia: Titien Ahmad. For more details about this highly experienced writer and observer of the industry, scroll down to the bottom of the article.
Although there has been increased interest
in Islamic wealth management lately, an authority on this segment of the
financial world says there has been excessive focus on wealth accumulation at
the expense of more important issues.
“There are still a lot of opportunities yet
to be tapped in Islamic finance with better infrastructure,” Professor Shamsher
Mohamad Ramadlilli Mohd, told this publication recently in an interview.
“The focus of Islamic wealth management has
been around the wealth accumulation and generation aspects given the
development of the bond and equity markets and the ready client demand. However,
there are other opportunities in Islamic wealth management such as wealth
distribution, protection, purification that are not explored sufficiently by
practitioners,” he said.
“Practitioners in markets where Islamic
wealth management has taken shape such as Malaysia, Bahrain and Saudi tend to
focus on wealth generation as they have tapped on the growth of the banking and
capital market sector in that market. For example, tapping on the demand for bonds
through ‘sukuk’ issuance,” he said.
The developing Islamic capital markets has
generated a myriad of savings and investment products that adhere to the Shariah
investment principles forbidding interest, uncertainty and investment in
companies dealing with areas that are prohibited in Islam such as gambling,
alcohol, tobacco, arms and pornography.
Previously, Shariah-compliant products tend
to be introduced by boutique investment companies focusing on this market but
recently non-Shariah specialists are also starting to tap on the growing
demand. Franklin Templeton launched three Shariah-compliant,
Luxembourg-domiciled investment products earlier this year.