Proposals to make New Zealand a financial "superhub" are "just pie in the sky," says a Kiwi who has spent nearly 30 years working in the international fund management industry.

Philip Crotty, who returned to New Zealand in 2008 after working in London, Singapore and Hong Kong, said it was a nice idea to pitch New Zealand as a hub for the fund management industry but making it a reality would be much harder.

"The financial industry is very conservative. It already has strong domiciles in Luxembourg, Dublin and the Cayman Islands. How do you compete? What is the difference [in being New Zealand-domiciled]? There isn't one."

Crotty, who works for New Zealand Assets Management - a New Zealand hedge fund manager which runs Cayman Island domiciled funds, said the only incentive being touted was New Zealand's lower employment costs and other countries could easily duplicate that.

"You would have to get fund managers to set a precedent by domiciling here and to do that the underlying investors have to be won over as well."

Crotty said the Government would have to embark on a marketing campaign to convince managers which could be hugely expensive. "Cabinet ministers would have to go out and market it."

The only other incentive New Zealand could offer would be tax breaks which the Government has already ruled out.

"In theory it sounds like a good idea but in practice the time and cost involved - you would have to take a pragmatic view."

Prime Minister John Key spoke of the potential to create 3000 to 5000 jobs by developing and promoting New Zealand as a domicile and supplier of middle- and back-office functions for international managed funds last month in response to recommendations by the Capital Markets Development Taskforce.

But details of how it would work have yet to come to light.

Crotty said a recent visit to Asia showed individual investors and large financial institutions were still very nervous about the markets and many believed they were likely to go down again after such a strong run in 2009.

New Zealand Asset Management has been trying to expand into Asia but had struck reluctance in the wake of the global financial crisis.

Crotty said he expected it to be another 12 to 18 months before demand from investors began to pick up again.