Published On

June 9, 2014

Published In


THE NEW YORK TIMES, THURSDAY, OCTOBER 23, 2010A Club to Discuss Discreetly the Issues of WealthBy FRAN HAWTHORNEIN 2003, Mark Kress was having money troubles.Not a lack of money. Mr. Kress had amassed an eight-figurefortune from products and programs he marketed through thetelevision shopping network QVC and from Spencer ForrestInc., a maker of treatments for thinning hair that he foundedin 1981.His problem, he said, was that “I had issues surroundingwealth, many of which I couldn’t discuss even with my bestfriends,” adding: “If I turned to a friend and said, ‚ÄòI have Xdollars but I don’t feel like I have enough,’ my friend mightconsider it bragging.” In particular, Mr. Kress wanted “to geta better understanding of the principles of investing and beexposed to investment opportunities.”Then he read a news article about something called Tiger 21.Tiger 21 – the acronym stands for The Investment Group forEnhanced Returns in the 21st Century – is for the person whohas everything except someone to discuss it with. At daylongmeetings each month in six United States cities, about a dozensuperwealthy people at each location ponder their money, howto manage it, how to give it away, how much to hand to theiroffspring and the personal problems their fortunes can create.”We all learn from each other; that’s the magic of thisplace,” said Ronald Bruder, a member of one of the seven NewYork City groups and a serial entrepreneur who has started orrevamped companies specializing in real estate, environmentalengineering, oil drilling, medical devices and travel.The organization was co-founded in 1999 by MichaelSonnenfeldt, a New York City entrepreneur who had sold hisreal estate business and wanted to invest the proceeds “in aresponsible and effective way,” as he put it. He modeled hiscreation after a peer-to-peer learning group of chief executivesto which he had belonged. Five more chapters are expectedto start by next year, with three others on the drawing boards.Membership is highly selective. Originally, people neededat least $10 million in investable assets. Mr. Sonnenfeldt saidthere was no longer an official minimum, but he pointed outthat the 140 members collectively had $10 billion and theyhad to be able to afford the $30,000 annual fee.Mere dollars are not enough, however. “They have to havebeen a wealth creator or a good steward,” said Harley Frank,the director of membership, one of eight full-time employees.If they inherited a fortune or won the lottery, they must havebuilt on that base. That was apparently the case with Gregory T. Rogers, whobegan his career in the 1980s at Rogerscasey, the investmentconsulting firm started by his father. The younger Mr. Rogerspointed out that he left Rogerscasey and founded or co-foundedthree asset management and consulting businesses beforejoining Tiger in 2005. early two-thirds of Tiger members are entrepreneurs.In rare cases, Mr. Sonnenfeldt said, “someone with deepexperience in a field like politics or science or philanthropy”might get in with a slightly skimpier cash cushion.Prospects are screened by Mr. Frank and other staff membersand by the leader of the local group they are most likely tojoin. Applicants then attend a meeting for a few hours, ona trial basis. Perhaps the toughest part, for these ambitious,successful strivers is that “they have to check their ego at thedoor,” as members repeatedly say.While would-be Tigers need not be referred by currentmembers, it helps. Only about 40 percent of the applicantsare ultimately accepted. According to Mr. Sonnenfeldt, almost10 percent are women and 5 to 10 percent are part of racialminorities. Ages range from the mid-30s to mid-80s, with anaverage in the mid-to-late 50s.True to the full name, the meetings focus on finance. Peoplebring up investment ideas, and money managers pitch theirproducts. The highlight is the “portfolio defense,” a one-hourgrilling during which a member analyzes his holdings almostto the penny.For many people, that frankness is not easy. “It’s like goingin front of a doctor and baring all,” Mr. Bruder said. Duringhis first time up, he was challenged about his conservativeapproach, including a heavy allocation to fixed income.”I didn’t feel attacked,” he said. “They’re asking ‚Äòwhy,’ butthey’re supportive.” Anyway, he added, everyone will be inthe hot seat at some point.Although he did not drastically change his investmentstrategy, Mr. Bruder said he had picked up valuable advicefrom the discussions. Thanks to Tiger, he now has a “serious”portion of his assets (he will not say how much) in foreigncurrencies.Similarly, Mr. Sonnenfeldt was inspired to start investingin gold, and Mr. Rogers increased his spending on marketingfor one of his companies, Raylor Investments, which managesabout $25 million of his own and outside money.On the other hand, knowledgeable investors can sometimeshave bad ideas. Mr. Kress recalled that at his inauguralportfolio defense, in 2003, when a large portion of his networth was in his own privately held business, “I got strongadvice to sell all or part of the company. They said I couldsell off and put the proceeds in the stock market.” He declinedto follow the suggestion, which turned out to be wise. Sincethen, he said, his own company has tripled in value, while theStandard & Poor’s 500-stock index, after a slow climb andabrupt tumble, is only slightly above where it began.”To them at the time, it wasn’t bad advice,” he said. “It wasinteresting to hear.”Finance encompasses only about two-thirds of the meetings.During the opening hour or two, when each member gets five minutes for a “world update,” personal issues are as likely tobe updated as portfolios – divorces, aging parents, healthissues, home projects, vacations, philanthropy and most of all,the children.The No. 1 subject: “What’s an appropriate amount to give?How do you enable your children to maintain the values youconsider important and also let them live the lifestyle you’reaccustomed to?” Mr. Bruder said.In his case, he said, his Tiger group “helped me makedecisions about what to fund and not fund” when his growndaughter wanted to start some business ventures.Many participants are now putting into charitable venturesthe energy, time and networking resources they once devoted tomoney-making. In 2004, Mr. Bruder started the Education forEmployment Foundation, which works with local businessesand governments in the Middle East and North Africa to createtraining programs.The outside speakers who come to every meeting haveincluded hedge fund managers, the television celebrity Dr.Mehmet Oz and the actor Robert Duvall, who was pitchinga movie venture to the Los Angeles group, according to Mr.Kress.The meetings are led by a professional facilitator who usuallycalls on people to speak. Typically, they sit around a table inthe conference room of a four- or five-star hotel, continuingthrough breakfast and lunch.Tigers have been known to cry. Even to hug. But, Mr. Bruderemphasized, “It doesn’t get all that emotional. The facilitatormoves it along quickly.”The bonds can grow into friendships. Members have traveledtogether and even bought homes next door to each other.Not everyone fits in. “We have counseled out two orthree members for behavior inconsistent with the norms,”like being disruptive or threatening to break the promise ofconfidentiality, Mr. Sonnenfeldt said.The most serious – but rare – grumbling comes from thosewho “have very unrealistic expectations,” Mr. Sonnenfeldtsaid. “They think they’re going to earn twice as much moneyin the first six months.”Complaints aside, the organization is growing. By nextyear it expects to have branches in four Canadian cities andin Washington. Further off are plans for Chicago and a secondgroup each in Los Angeles and Texas.That might seem like a sign that the economy is improving,but Mr. Sonnenfeldt said it was just the opposite.During the economic downturn, “high-net-worth individualswere exposed to risks that they found they didn’t understand,”he said. “They’re feeling adrift, and they’re looking forresearch.”