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June 18, 2014

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How to Connect with Ultra-Wealthy Investor NetworksBy Danielle Verbrigghe June 13, 2014 TIGER 21, a peer-learning group for ultra-wealthy investors, has expanded its footprint and membership base to meet investor demand shaped by low interest rates and a faster wealth creation cycle.

For asset managers and advisors that can offer up the right educational content, such networks could pose a way to gain access to ultra-wealthy investors. But such organizations, and their members, aren’t looking to be sold to, network leaders say.

One force driving wealthy investors to join peer-to-peer learning networks is a faster wealth creation cycle, leading to entrepreneurs selling companies at earlier stages of their life, says Michael Sonnenfeldt, founder of Tiger 21. Another is the difficulties posed by the low interest rate environment.”Trying to preserve wealth is dramatically more complicated today in a low interest rate environment,” Sonnenfeldt says.

Other networks such as the Institute for Private Investors (IPI) and Family Office Exchange (FOX) target wealthy families and individuals looking to network with their peers and access educational content. Those two groups also offer advisor memberships, allowing some multi-family offices and other advisors to join.

“We’re obviously approached by a lot of people,” says Sonnenfeldt. “Our job is to see if any of our members are interested in hearing their presentation.”

TIGER 21 has expanded to include 26 peer-groups across 16 cities in the U.S. and Canada, with 260 members, collectively representing about $25 billion in investible assets. Each group meets for one full day each month. Meetings feature one or two guest speakers, ranging from asset managers to nonprofits. About half of presentation topics deal with investment related material, while the other half deal with other topics such as personal security, family dynamics or philanthropy.

While presenters in the U.S. don’t pay to participate, the organization vets potential presenters to screen out overt sales pitches, and selects those with member-relevant educational material and expertise. Tiger 21 tracks which presenters have been well received through member reviews. Those that earn a stellar rating are invited back to speak with other groups. Those that don’t aren’t asked back.

“Every presenter’s task is to educate our members,” Sonnenfeldt says. “Our members aren’t looking to be sold, but occasionally they will make an investment. There are great opportunities that have come through TIGER.”

He points to some funds that are held across 20, 30, 40 or even 50 members. “It normally starts with a single member who says, ‘I’m really happy with this investment,’ or, ‘I’m thinking about this investment,'” he says.

Unlike some of the other networks, Tiger 21 membership is exclusive to the wealth creator, excluding family offices and other advisors. Most members have assets between $10 million and $100 million, though “a significant number” are above that range. Membership dues are $30,000 a year.

“When you sit around the table at a Tiger 21 group every other member of the group has created vast wealth from scratch, or in a few cases, who have inherited wealth but vastly increased it,” Sonnenfeldt says. “Every person is qualified to teach something unique.”

Tiger 21’s curriculum department provides a framework for groups to center discussions. Each group tends to take a varying degree of control over the topics, Sonnenfeldt says. Once a year members undergo a portfolio defense, where they defend the choices they have made in their own portfolio to the larger group. “This portfolio defense allows the rest of the group to really understand a person’s philosophy and the choices they have made,” Sonnenfeldt says.

The Institute for Private Investors (IPI), which was acquired by Campden Media in 2011, operates under a different model. IPI has about 1,150 members, representing 320 families. Average investible assets of IPI members fall at $200 million.

To be eligible to join IPI, private investors or families must have investible assets of $30 million or more.

While the majority of IPI is made up of private investors, financial services firms, including investment managers, consultants and multi-family offices, can join IPI as advisor members. Some advisor members can post up to two whitepapers a month for the private investor and advisor community and reply to investor questions online. Advisor members also have the opportunity to host and participate in monthly advisor roundtables. The Leaders Council allows advisor members to further enhance their profile by attending forums to learn alongside private investors. The Leaders Council is limited to 30 advisor firms.

“The ultimate mission of IPI is to be a bridge between the high-net-worth community and the financial services community,” says Mindy Rosenthal, president of the Institute for Private Investors & managing director of Campden Wealth. “We believe very strongly that there needs to be engagement, but appropriate engagement.”

That means no selling is allowed, Rosenthal says.”[Members] very much want a place that’s a safe harbor that provides conflict-free education, where they know they are protected,” Rosenthal says.

IPI holds more than twenty events a year around the world, and holds two-day forums twice a year in New York and San Francisco to address investment challenges and market conditions. IPI members also get access to parent company Campden Wealth publications and can access proprietary research reports on family office trends, wealth preservation strategies and other topics. IPI has also launched a co-investment collaborative for families looking to co-invest to buy companies together.

For its part, Family Office Exchange serves about 330 ultra-wealthy families, with a median assets level of $450 million per family. Each family is assigned a relationship manager, who gets to know the family and learns what they are trying to achieve in the short and long term, says Alexandre Monnier, president of Family Office Exchange. The relationship manager provides advice and coaches the family on what issues should be on their radar.

The organization also has about 150 advisor members. Of those members, around half are multi-family offices, while the other half are other advisors serving the market. Some advisor members can also distribute research and white papers to FOX members, and sponsor FOX studies and events, according to the firms’ website.

FOX holds separate events, some that are families only, some in which advisors are invited as subject matter experts, some with both families and advisors, and some that are advisors only.

In addition to peer exchange and relationship manager provided content, one of the firm’s core offerings is its set of councils, or groups of members with similar interests that meet periodically. The councils contain a mix of peer-discussion and FOX-provided content.”It’s a very powerful mix of FOX-driven content and peer exchange,” Monnier says.

The highest level of FOX membership for advisors is joining the Thought Leaders Council or the MFO Council.The organization has also seen a higher rate of growth across council memberships. This could be “a sign there is a need in the market for these hybrid experience between pure exchange and FOX education,” Monnier says.