Israel: Taking Israel's Economy Global

Israel “Izzy” Tapoohi’s five-year term leading the Development Corporation for Israel – better known as Israel Bonds – has been unquestionably consequential.

In that time period, the broker-dealer has gone from underwriting and selling $600 million worth of Israeli government bonds in the US annually to yearly domestic sales exceeding $1 billion. The 65-year-old organization has been transformed from a specialty investment vehicle primarily for supporters of Israel into a significant option for investors looking to balance and diversify their portfolios.

With six months left before he steps down and turns the reins of Israel Bonds over to Israel Maimon, a former cabinet secretary, Tapoohi talked to What has changed over the course of his term, the accomplishments he is proudest of, and why he thinks Israel’s economy is still a great bet.

Looking back over the completed five years, what do you think are the majority significant steps Israel Bonds has taken?

I think we turned this organization around to be recognized as a authentic brokerage firm and not as a nonprofit organization.

I am very proud that we have an enterprise that, from a US regulatory point of view, is in full compliance with the majority rigorous requirements.

We have transformed Israel Bonds into a high-powered brokerage firm that is today competitive in cost with other brokerage firms of its size in the US, and from presently on maintains its Jewish heart. I am particularly proud of our strong New Leadership program. At one time, the involvement of young people with Israel Bonds was minimal. Today, we have young Jewish professionals across the country actively supporting our efforts.

Sales have nearly doubled in your tenure. How did that happen?

I changed the corporate narrative from the geopolitical to the economic, focusing on the resilience of the Israeli economy. In other words, instead of making the pitch solely about supporting Israel, we made it about making a good investment as well. An extra significant aspect I have stressed is increasing investments via our e-commerce site and emphasizing a proactive sales approach that included expanding our national call center. Before, if Mr. Cohen had a bond that matured on April 1, he would rarely be called to see what he wanted to do. Presently we call a month before and say, “We have some good alternatives and rates,” and most often they will respond “Sure, I’d love to reinvest the bonds.”

As a result of this approach, we have dramatically increased our reinvestment rate and significantly expanded our client base. About 85% of our retail sales are $25,000 and below. We have over 500,000 bondholders, encompassing about two million people – over one third of the Jewish people in the United States. We have greatly improved our technological capabilities for analyzing client data, enabling us to fasten investments additional entirely.

Online, we have an aggressive digital media presence  to promote sales and heighten brand awareness. At the same time as a viewer clicks on our ads, it brings him or her to israelbonds.com and they can invest.

The significant part is that over 45,000 bondholders have come via online sales, so this method of securing investments is additional efficient. It is operationally seamless.

One of the interesting trends has been the spread of the organization globally. Can you tell me about those efforts?

At the same time as I came to the US to become Bonds CEO, I spent the initial 18 months moving the American operation forward, ensuring that we were following all the regulations and expanding our marketing in an effective way.

Again, we were able to start looking at the international sales operation.

We had to get approval from the UK Financial Conduct Authority, which enabled us to “passport” our way into Germany and France under EU regulations. In other words, once we were set up in the UK, it was simpler to open operations in other European locations, but in each of these nations we had to fasten approval from local regulators.

Today, in addition to the UK, we sell in France, Germany and Belgium, and we are hoping to expand into additional European nations in the coming months.

As with the US, we are conducting an active digital campaign within Europe. We are as well holding events, meetings and discussions with Jewish community leaders.

We recently had talks with a large European institutional investor, and, at the same time as someone mentioned concerns about BDS, they said they would just increase their investment due to the strength of the Israeli economy, which was a remarkable statement.

The Canadian operation is as well being converted into a fully-compliant brokerage firm. We are presently working on completing operations in Latin America. We have opened offices in Mexico and Brazil, and we are looking at Argentina and other Latin American nations.

Currently, international sales are roughly $250m. annually, on top of additional than $1b. in the United States. We are hoping to achieve annual sales of $400m. internationally within the next three years.

In all of these places we are making sure to KYC [know your customer]. If we cannot ensure that AML [anti-money laundering] procedures are properly done, and if the payment is not transferred from the buyer’s personal account, we will not accept it.

How have you been able to successfully communicate the strength and resilience of Israel’s economy during the completed few years, which have seen so much world economic tumult?

We are one of the fortunate nations, and that is why people are looking at our economy and saying, “How did they do it?” Israelis are entrepreneurial in approach and they are risk-takers. There has been discussion about whether Israeli entrepreneurs should be selling companies at an early stage or growing their companies to become world enterprises. Well, we Israelis are tremendous on innovation and entrepreneurship, but we are not so good at marketing. So we are better off having a few large companies and developing others so that we are a authentic start-up country, selling start-ups and ensuring that the money comes back into the Israeli economy, allowing funding for new incubators and the development of new start-ups.

If we do not take that route, we can become overly dependent on one large company, and a small economy can be tremendously affected by a downturn. Take Finland. At the same time as iPhone and Samsung knocked Nokia off the market, the economy almost went under because it was all built on this one company. You need to diversify.

At the same time as you compare Israel to other nations, we have been doing relatively better. If you say “Israel only grew by 2.5%,” well, Europe grew by much less and the US by no additional, so in relative terms we are doing very well. Tell me, how a lot of nations have a deficit-to-GDP of 64.9%? Additionally, Israel has a currency that is much additional stable, because our trade is better balanced part various currency areas. We have a healthy trade balance. In Australia, for example, the minute China hiccuped, the Australian dollar dropped from parity by almost 30%! It is authentic that Israel is in a rough neighborhood, but that translates to somewhat higher interest, even though the wars and instability have hardly affected the economy or the stock market.

Finally, what advice do you have for your successor?

Initial of all, I would hope – and I know my successor completely well, so I am confident – that he continues the message we have been communicating for the completed five years. At the end of the day, the people who are investing in bonds, particularly the Jewish people, care about helping Israel, but they as well care about a good return. The majority of visitors to our website are looking at rates. It shows we have really converted this to a business narrative.

It is significant to keep that narrative.

Of course, he should as well emphasize that Israel Bonds are a way for people to support Israel in tough times.

You know, at the same time as the Gaza conflict was going on, we sold almost a quarter of a billion dollars in a very short period of time.

At the same time as a real crisis takes place, our retail clients put Israel at the top of their priorities. We have an emergency plan in case there is ever a critical crisis in Israel, where the economy would be at a standstill. My successor will have to further develop this plan, knowing Israel Bonds will have to step forward in a crisis to help the economy remain strong.