Ex-UBS Bankers Target Israeli Millionaires With Wealth BrokerBy
Zwei Wealth Experts opened first overseas office in Tel Aviv
Israeli millionaire households rose 17 percent last year
Two former UBS Group AG bankers are exporting their Swiss private-banking advisory business to Israel as a boom in the country’s technology industry prompts a rise in the number of millionaires and money managers.
Zurich-based Zwei Wealth Experts AG, founded by Patrick Müller and Klaus Wellershoff, opened their first overseas office in Tel Aviv this month. The company is seeking to tap a new breed of millionaires with its offering -- pairing clients with asset managers by assessing their risk appetite and the bank’s investment expertise and performance, Chief Executive Officer Müller said in an interview.
“In many ways, Israel is a very representative market to test our approach," he said in an interview from Tel Aviv. “There is wealth and a curiosity for new solutions." The company has placed $30 million of assets in its first week of operation, said Müller, who led UBS’s operations in Israel and Africa until 2012 before heading up the bank’s European sales team.
Israel’s high-tech boom is creating a new generation of millionaires after the value of assets sold in 2016 rose to their highest level for four years, according to a report by IVC Research Center and Meitar Liquornik Geva Leshem Tal. The number of Israeli millionaire households rose 17 percent last year to about 162,000, according to Boston Consulting Group. To serve this growth, there are now about 100 private banks and family offices in a country of about 8.5 million people, according to Zwei.
While this marks an opportunity for the company, Müller acknowledges that convincing clients to switch banks isn’t an easy task.
“There’s a saying in our industry which goes, ‘a client will leave his wife before switching his private banker,’" he said. "Success in private banking has generally been measured by the longevity of the relationship, not the performance."
Müller and former-UBS chief economist Wellershoff set up Zwei in 2014 after collecting data from about 70 private banks that showed two-thirds of asset managers were under-performing a benchmark of passively-managed funds, Müller said.
“Clients were suffering from an inherent conflict of interest that motivated bankers to sell products that generated higher fees but not necessarily higher returns on the investment,” he said. “Klaus and I then understood that advisory services and asset management should be split apart."
Zwei compares historical returns of different fund managers like other firms that assess portfolio performance such as IBO SA, which is headquartered in Morges, Switzerland.
“There’s hardly ever been real competition in private banking," said Müller. “This should seem basic because no one bank is good at everything."
The company runs tenders that allows clients to discern between the performance and cost of competing banks. It charges about one percent of the portfolio for its advice and a nominal fee to monitor the fund managers, Müller said. In Switzerland, the company has placed about $700 million of assets for 80 clients, or about 0.01 percent of the country’s $6.6 trillion wealth-management market. Zwei employs about 20 people between four offices in the country.