Time and timing – the 40 years that shaped Craigs Investment Partners

It is said that time in the market beats timing the market, but both time and timing have helped Craigs Investment Partners grow from a small country broker to one of New Zealand’s leading wealth management firms.

Today, Craigs manages close to $30 billion on behalf of 65,000 private wealth and corporate clients. Over 180 investment advisers service clients across 19 branches, supported by one of New Zealand’s largest private wealth research teams. Craigs’ highly regarded investment banking and institutional equities teams also play a key role in New Zealand markets.

Challenge and opportunity through the ’80s

When Neil Craig bought out Whakatāne single office country broker C.J. Rogers in 1984 and brought fellow Tasman colleague, Brent Sheather, into the business, they couldn’t have known the turbulence that would follow in the next few years or the opportunities it would bring.

By 1986, then ‘Craig & Co’ was investing in technology. It was the second country broker to have a computer and the first Whakatāne business with a fax machine. Craigs had established a presence on the Auckland trading floor and was executing transactions for other country brokers, for a short time using a public phone booth to communicate transactions to its head office in Whakatāne before an office in Auckland could be established. But it would be the 6.3 magnitude Edgecumbe earthquake together with the February ‘mini crash’ in 1987 that would set Craigs on a unique trajectory.

The earthquake wreaked havoc on Craigs’ fledgling computer records, and the sharp rise in trading volumes during February highlighted some administrative shortcomings. The team was determined to address these issues. The ensuing remediation exercise meant Craigs was on top of its settlements and reconciliations record keeping heading into the 1987 sharemarket crash. The industry, however, was not. In August of the same year, Craigs completed its broker reconciliations but received not a single completed report back from other brokers. On 20 October 1987, when the sharemarket fell 15 percent in one day, many firms struggled under the weight of unreconciled transactions. Craigs had just one outstanding order to trade.

The New Zealand market continued to drift downwards until 1991, falling longer and further than almost all other markets. The 1987 crash left industry participants reeling and many closed their doors. With Craigs in relatively sound financial shape, Neil decided to expand the business, offering struggling sharebroking firms the opportunity to become a part of the expanding Craigs network with access to global equities and a growing range of in-house services. Craigs’ acquired offices in Rotorua, Gisborne, and Tauranga, and hired advisers in its Auckland office. All the sharebroking firms in the Bay of Plenty merged under the Craig & Co umbrella.

Service expansion through the ’90s

A strategy advocating a holistic approach to investment advice and portfolio management was introduced in 1990. It is a philosophy that Craigs has continued to build on through the years, with advisers now considering tax awareness, wealth transfers, estate planning, ESG and philanthropic investing alongside traditional investment advice. Then, as now, the investment philosophy was founded in balanced portfolios, quality assets generating reliable and growing income, and overseas diversification, delivered though the personalised assurance of a strong client-adviser relationship.

In 1991, the listing of Telecom heralded renewed interest in the New Zealand sharemarket. Craigs had survived the crash, safeguarded clients against its worst effects, and emerged in a strong position for national growth.

Neil says much of Craigs’ success can be attributed to a client-centric mindset, with well-timed innovations meeting clients’ needs. In the mid ‘90s when power boards were issuing shares to eligible customers, Craigs set up pop-up offices in small towns and shopping malls and developed a process to complete share sales remotely. Shareholders wishing to sell could receive their cheque on the spot. Craigs introduced in-house custodial services, safeguarding client holdings and taking care of all client portfolio administration needs. Cash Management followed shortly after with foreign currency and term deposit services. Craigs introduced mySTART in 1997, making investing accessible to regular savers.

Strategic partnerships boost experience in the 2000s

Today, Craigs is wholly New Zealand owned by employee and director shareholders. But different ownership models have supported its growth through the years. In 2001, one of the world’s then largest banks, ABN AMRO bought a 50 percent share in Craigs. The purchase of the private client advisory business of Merril Lynch New Zealand saw a team of New Zealand’s leading advisers join the firm. Craigs staff bought back shares from ABN AMRO in 2009 and purchased the ABN AMRO (New Zealand) investing banking and institutional equities dealing business, making Craigs a full-service firm. From 2010 to 2020, a minority share in Craigs was owned by Deutsche Bank. Craigs Corporate Advisory team formed from this transaction and would go on to become one of the most awarded and highly regarded in New Zealand.

By 2005, Craigs was a well-established nationwide firm. The ‘87 crash had brought home the importance of solid, now well-established, back-office practices. Craigs’ research team and investment committee were providing advisers with core portfolios and tools to match clients’ investment objectives and risk profiles. Strategic international partnerships and the integration of investment banking gave the firm size and stability.

In 2008, the industry would again be tested with the onset of the Global Financial Crisis. From October 2007 to March 2009 the then NZSE50 Index fell 44 percent. When the market experienced another sharp fall during the COVID-19 pandemic in 2020, the Craigs’ team was well-placed to provide reassurance and advice to clients, having weathered previous market events.

In 2011, Treasury appointed Deutsche Bank and Craigs Investment Partners as Crown Financial Advisor for mixed ownership preparatory work, giving Craigs a lead role in the initial public offering for Meridian Energy. There was strong participation from clients and the stock remains a portfolio staple today.

Community involvement

With success comes the opportunity to give back and supporting local communities has been at the heart of the Craigs’ story, too. Acorn Foundation was established in 2003 and Neil worked with other community leaders to structure an endowment fund where the income stream off the capital could fund donations to charitable causes in perpetuity. The concept was successful and in 2017 Craigs became a founding partner of Community Foundations of NZ.

Today, Community Foundations of NZ administers 18 community foundations across New Zealand using the structure pioneered by Acorn Foundation. Since 2017, $240 million has been invested in endowment funds with $60 million in grants issued to community recipients. The sums include contributions from Craigs’ employees participating in the Workplace Giving programme established in 2019, where Craigs matches employee contributions up to $500 per employee, per year.

Looking ahead

Neil says the relationship-based approach to wealth management, focus on quality assets and diversified portfolios, and well-timed business innovations that have driven Craigs’ past growth will continue to serve the company and its clients into the future.

Advances in technology will enhance, not replace, the client-adviser relationship that’s fundamental to the business. The holistic advice offering continues to expand as intergenerational wealth transfers and sustainability factors become core considerations for clients.

Strategic partnerships continue to benefit clients, like the recently announced partnership with J.P Morgan Asset Management delivering the best in international insights combined with the reassurance of a Kiwi owned and grown firm. As the economy shows signs of recovery from the economic repercussions of COVID-19, Neil is confident in Craigs’ ability to guide clients through the ups and downs of the market towards their objectives, delivering for clients, employees, and communities along the way.

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