Asaf Banai (51) is one of the most influential figures in financial planning in Israel. Together with partner Shlomi Elberg, he is behind the Profit Financial Group – the largest entity in the sector in Israel.
Profit's journey began in 2006 as a modest insurance agency, which was sold to financial giant Psagot and then reacquired by the founders. Today, the group has over NIS 70 billion under management, and brings together 300 agents and financial planners. Banai was the first guest in the "Globes" Financial Growth Track series, presented in collaboration with Profit.
"Our journey actually began even earlier, around 2002-2003, when we both started out in the industry," he says in conversation with "Globes" news editor Bar Lavi. "But we founded Profit in October 2006, and it's an interesting story that started out in a snacks kiosk, because we didn't have offices at all. We had a very-well defined vision that we wrote out on a paper napkin: to be the entity with the largest, highest-quality non-bank distribution system in Israel for insurance, pensions, and financial products. Happily, we’ve already achieved this goal. At one point, we were owned by Psagot, which acquired us, and then we bought back the company. Now we are a privately-held company that operates on a very large scale."
You currently manage more than NIS 70 billion. How does one get to volumes like these?
"More important than the amount itself is the rate of growth; we're growing by nearly a billion shekels a month. What's nice is that it happens by word of mouth, from one satisfied customer to another, from one organization to another. We do this through our 300 financial planners, whom we're very proud of. They're the ones on the ground, meeting the customers, understanding their needs and matching them with the right solutions."
Who are your clients, and how do you work with them?
" We cover the entire spectrum of offerings – from employees at large enterprises, government entities, public and private companies, to kibbutzim and large corporations. Basically, anyone who needs guidance and common sense in their financial decision-making process. We believe that wise financial consumerism rests on ongoing dialogue. It’s not enough to meet the client once and give them recommendations. You need to be with them throughout the entire process, understand the changes in their lives, their needs, and the market, and adjust the strategy accordingly."
An unusual year and a surprising forecast
Over the past year, the Israeli capital market has faced a series of upheavals because of the war. Markets experienced a roller-coaster ride that ultimately gave way to a positive trend in both the stock market and the shekel exchange rate. Tectonic shifts also occurred in the savings landscape, marked by the introduction of new investment tracks and trends that have gathered momentum.
How did you cope with this period?
"It was a very challenging time, even before the war, with the controversy surrounding the judicial reform — or revolution, whatever you want to call it. Immediately after the outbreak of the war, after the first two weeks of shock, we felt a great obligation to go talk to our clients. We knew they needed us because the panic level was very high and could lead to wrong decisions.
"We presented a very optimistic picture about the post-war capital market. Some clients were even angry with us because it seemed too optimistic to them, but fortunately we were right. The year was challenging, but in the end, financially, it was very successful."
As a large enterprise, how do you keep in touch with all your customers?
"We ask each of our 300 planners to make efforts to stay in direct touch with their clients. We do this in every possible way: Zoom, messaging, direct communication. For example, during the war we held a Zoom webinar with our chief economist, Amir Kahanovich, to which 4,000 people signed up. We have to be in constant contact because the world is changing, client needs are changing, the financial reality is changing, and regulation is changing."
What are some common mistakes people make during times of crisis?
"The most common mistake is trying to time the market and thinking you know when to get out and when to get in. Our approach at Profit is to guide clients towards sound, rational decision-making, resisting the distractions of ego, fear, and greed.
"People make wrong decisions because of the desire to make a quick profit, out of fear leading to panic, or ego that makes them believe they know better than everyone else. We saw this after the war broke out, we saw it during Covid: irrational sell-offs that stemmed from panic. When I do financial planning sessions — and I’ve done more than 21,000 over the past 20 years — I see over and over again how people fall into the same traps. Even the ones who say, 'It won't happen to me, I'm not stupid, I know exactly what I'm doing,' end up giving in to those disruptive impulses."
"Not everything has to be dramatic"
While the hot trend among pension and retirement savers over the past two years has been the S&P 500 tracks, Profit has a different approach to investment. "We strongly believe in aligning with the average. At the beginning of 2023, when everything seemed to be collapsing, we estimated that the return on the general track would be 14%. That's exactly what happened. Not because we were prophets, but because we looked at the long-term averages," says Banai.
"Every year we check to see what the return needs to be so that, looking back over five years, we’ll be at the multi-year average return. In the five best years, it was 42%. In the five worst years: minus 4.5%. The average multi-year return on the general track for a provident fund is about 7%, which is not bad at all. Not everything has to be dramatic. If you’re younger, you can invest some money in slightly more aggressive tracks. If you’re older and more conservative, there are other solutions."
What do you think about the trend of investing in indices like the S&P 500?
"These days, it's very fashionable to choose pure investment tracks like the S&P 500. But when I get into a taxi and the driver asks me what I think about the S&P, I know there’s a problem. It reminds me of previous times – at one point it was cannabis, then Bitcoin. History has shown that, particularly for long-term savings, index-linked tracks-especially those pegged to leading indices like the S&P 500-tend to generate excess returns compared with general investment tracks. But most people simply won’t be able to stick with it. We’ve seen it again and again — during the financial crisis of 2008, the Covid pandemic, and now the war. Each time, people say. 'It’s different this time.'
"I lecture a lot at high-tech companies, and they really like this track. But I know that in two, three, four years, at some point, the S&P 500 will drop sharply – tens of percentage points. How do I know? Because that's how it's always been. And when that happens, most people will run away, because at that time they will also be facing other challenges – layoffs, options that will lose their value, bonuses that will not be paid. There are situations in life that you simply cannot predict.
"That’s why I always prefer that people should save through investment tracks with low volatility. It doesn’t have to be a general track-it can be a diversified mix. You must understand human nature and know that we are rational beings, but also emotional. My role is to bring reason into the process, explain upfront that we’re all vulnerable to emotional reactions and distractions, and to help build a strategy that minimizes the likelihood of that."
You’re very critical of bank deposit accounts.
"Deposits are a disaster, there is no logic in being there. This is only happening because the banks prioritize pushing the public into deposits, where their spreads are widest. This trend began in January 2023, when a flood of money flowed out of mutual funds, investment portfolios, and securities. I estimate that about NIS 1.2 trillion piled up in deposits. By comparison, anyone on the general savings track made an excess return of more than 10%-15% on their money.
"In addition, the public pays 15% on the nominal profit on deposits. Inflation has been very high in recent years, and the result is that Israelis received zero real return and paid taxes on it. That’s the reality."
"Planning to expand into additional areas"
What are your tips for next year?
"First, get into the capital market if you're not in there yet. Second, don't leave it, no matter what. And third, make sure to be in tracks that provide worldwide exposure. In my estimation, in 2025, we'll see returns of 6%-8% in the general tracks. But it's important to understand that we're not prophets. This is common sense according to the average alignment model, but if the return is lower, the market will owe us, and if it's higher, we'll owe the market."
Where is Profit headed, will you maintain your growth rate?
"We’re planning to expand into many areas, including abroad. The goal is to reach more clients, with more financial planners. We’re in the financial industry, but we’re also driven by a true mission. I lecture at schools because I want to bring this message to the general public. To do that, we need to grow, and we’re planning big moves in the future. It’s a big responsibility to manage such large sums of money, but as I tell my agents, while it’s scary to give recommendations, it’s even scarier to be on a Shin Bet tactical team or a surgeon."
How do you deal with being responsible for tens of billions of shekels?
" First of all, it's important to clarify: we don't manage the money ourselves. The money is always invested in channels managed by investment managers, whether insurance companies, investment houses, funds, and the like. Our role is to be the compass, the guide. The responsibility is enormous, because people really listen to us. Over 20 years, we’ve built a relationship of trust, and that's something that needs to be maintained. This isn't just another job. This is financial leadership in the fullest sense of the word.
"My vision is to reach every citizen in Israel and explain to them that deposit accounts are a disaster, and that one must be a wise financial consumer. This is truly a mission, as I see it. When I see how much money the public loses because of wrong decisions, it hurts me. I want every person in Israel to understand they have an opportunity to build a better financial future. To understand that they don't need to be a financial genius or a sophisticated investor. They just have to understand a few basic principles and stick to them over time."
The "Globes" Financial Growth Track series took place in collaboration with Profit.
