UAE approves robo-advisory services for licensed portfolio management firms

The UAE’s Securities and Commodities Authority (SCA) on Tuesday allowed licensed portfolio management firms to offer robo-advisory services, marking a strategic step toward establishing a secure digital investment environment in the country.

The regulator said it approved the regulation of the robo-advisor service, allowing firms to provide services through digital platforms that utilise artificial intelligence (AI) technologies and advanced algorithms to deliver automated investment recommendations.

To ensure investor protection, the SCA’s regulatory framework sets mandatory independent IT audits, rigorous cybersecurity standards, regular reviews of algorithms and systems, and full disclosure of the service’s costs and risks.

Portfolio management services are typically provided by large banks and financial firms to their high-net-worth clients and private companies, enabling them to grow their wealth and achieve their financial goals. These firms provide tailored investment strategies, asset allocation and ongoing management of investment portfolios.

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According to Boston Consulting Group’s Global Wealth Report 2024, the UAE’s net wealth reached $2.9 trillion in 2023 as financial wealth grew by 10 per cent from 2022 to 2023.

These services uphold high standards of governance, transparency, and investor protection within the approved portfolio management frameworks, whether discretionary or non-discretionary and in accordance with client agreements.

Waleed Saeed Al Awadhi, CEO of the SCA, said this project reinforces the UAE’s position as a world-class financial centre by advancing continuous innovation and implementing dynamic regulatory frameworks designed to address future market challenges.

“The integration of artificial intelligence into investment decision-making is not merely a technological development, it is a transformative turning point that enhances portfolio management efficiency and unlocks unprecedented opportunities to empower investors with smart, sustainable, and secure financial solutions,” said Al Awadhi.

The robo-advisor services will advance the competitiveness of the UAE’s financial markets, accelerate digital adoption, and contribute to the UAE’s ‘We the UAE 2031’ vision of building a knowledge-based, competitive, and sustainable economy.

The Securities and Commodities Authority said robo-advisory services are part of its initiative to advance financial inclusion by broadening access to intelligent and secure investment solutions.