Why a Swiss bank has invested in New Zealand wealth management

Swiss bank EFG CEO Giorgio Pradelli.

• Rising geopolitical risk and market volatility present an opportunity for investment, EFG CEO Giorgio Pradelli says.
• EFG has invested $67.5 million for a 75% stake in Investment Services Group.
• Wealthy families are diversifying geographically due to instability, with New Zealand being a key location.

Rising geopolitical risk and market volatility present an opportunity for New Zealand, according to the chief of a Swiss bank which has just invested here.

“We increasingly see the trend for wealthy families to diversify in terms of geographical presence,” Giorgio Pradelli, CEO of Swiss private bank EFG, said.

“Given the geopolitical instability in other parts of the world, many people are thinking about New Zealand to diversify their assets.”

EFG has, via Australian subsidiary Shaw and Partners, just paid $67.5 million for a 75% stake in local wealth manager Investment Services Group (ISG).

ISG was founded by Paul Glass and includes Devon Funds, JMI Wealth, Clarity Funds Management, Select Wealth Management and Tahito.

Pradelli was in Auckland last month to meet the team at ISG.

While EFG still targets the boutique private banking market, it increasingly invests globally.

“We have more than 40 locations around the world and 10 main hubs in the key financial centres,” Pradelli said.

“We have five regions: Switzerland, the UK, continental Europe and the Middle East, Latin America and Asia Pacific.”

“We call it a global boutique. We believe that in our business, we need to be global, as our wealthy clients have become more and more global themselves. They are global citizens.”

EFG started investing in Singapore and Hong Kong in 2000, then, six years ago, made the Shaw and Partners acquisition in Australia.

“We believe that in this part of the world, there is a huge wealth-creation opportunity,” Pradelli said.

Pradelli said the risk of geopolitical risk in the past few years has accelerated the demand for global reach.

All the global debate about tariffs has further increased volatility, he said.

“There was a time when everybody was talking about Tina [There is No Alternative]. It was a period of relative stability, with markets that were always gradually going up in a stable environment,” Pradelli said.

“Things have changed. We see more and more an environment of volatility and uncertainty. We passed from Tina to Vuca ... [Volatility, Uncertainty, Complexity and Ambiguity]”

Pradelli says there are two key trends that are critical for EFG to stay on top of.

“One is to assess where the wealth is created and generated,” he said.

“This is why we need to be very close to our clients and why we have these 40-plus locations. We still believe there is a lot of wealth to be created in the near future, particularly in the Asia Pacific, including Australasia, where there is a lot of economic activity.”

The other critical element is to understand the global flow of wealth, Pradelli said.

“With all this volatility and increasing geopolitical tension, the wealth is going from countries where it is created to other jurisdictions, in terms of diversification.”

“The very wealthy families are diversifying in three dimensions: obviously, they are diversifying in asset classes, which as finance professionals we always preach; they diversify between financial institutions; and now they are diversifying geographically, in terms of financial centres.”

Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.