For years, financial salespeople have been gouging investors in the UAE. They charge nosebleed fees. 

The most commonly sold products stand virtually no chance of beating inflation over a period of ten years or longer.  When investors catch on to their fee-burdened riptide, they find their private parts stuck in a zipper.  They can’t sell without paying a hefty penalty.  In some cases, they lose everything if they sell before a pre-determined date–often 25 years into the future.

Media groups from The National to Dubai Eye ask if government regulations could change these firms. 

Fortunately, that won’t be necessary. Expats are already chopping at the serpents’ heads by making smart decisions.  Many are building their own investment portfolios of low-cost index funds.   Others are taking advantage of fairly priced, full-service financial planning with AES International. 

Others still, will employ the newest kid on the block: Sarwa.

Sarwa is part of the fin-tech (financial technology) revolution.  Similar to Canadian firms such as WealthBar and WealthSimple, or American firms like Betterment and AssetBuilder, Sarwa builds portfolios of index funds.  They charge a small fee to do so.

What does Sarwa Do?

1. They build low-cost portfolios of index funds for non-Americans
2. They rebalance those portfolios once a year
3. They don’t penalize investors for pulling money out before a pre-determined date
4. They don’t earn commissions, so there’s no hard sell
5. They charge 0.85 percent per year (they hope to lower this fee for large account holders).

Sarwa (which means wealth in Arabic) uses Interactive Brokers’ platform. 

Co-founder and CEO, Mark Chahwan says, “When we decided to build this business, we didn’t know what the local financial services industry was like in the UAE.  We were shocked to learn how many investors have been ripped off.” 

Chahwan was born in Canada, but he was raised in Lebanon.  He cut his teeth working for a pension fund in Canada.  “The company I worked for managed about $270 billion.  It was the second biggest pension fund in Canada,” he says.  “It was divided into a portfolio of index funds and a portfolio of actively managed funds.  But the team I worked with [the index fund team] outperformed the active managers.”

Sarwa builds index fund portfolios based on each client’s tolerance for risk. 

For those that want help determining their risk allocation, co-founder Danny Jabbour assists at no extra cost. 

Danny began his career at Merrill Lynch Wealth Management.  He moved to UBS AG where he partnered with one of the top Private Wealth Teams in Washington, D.C.

He isn’t a CFP (Certified Financial Planer or Chartered Financial Planner) but he holds the NASDAQ Series 7 and Series 66 qualifications.

“When clients invest with us,” says Chahwan, “their money is held in their names, with Interactive Brokers.  That means it’s as safe as if you used Interactive Brokers directly on your own.” 

For now, Sarwa is focused on building its business in the UAE. “But we can accept non-American expats clients from anywhere,”  says Chahwan.

Investors require a minimum of 500 (USD equivalent) to get started.

Financial firms like Globaleye, DeVere and Holborn Assets are likely shaking in their boots. Unlike dinosaurs of the prehistoric age, they can probably see extinction written on the dungeon walls.

Andrew Hallam is the author of Millionaire Expat:  How To Build Wealth Living Overseas