Peter Hadekel: Sharing knowledge drives investment club for the rich

MONTREAL | TUESDAY, JULY 09, 2013 | montrealgazette.com | SINCE 1778 Peter Hadekel: Sharing knowledge drives investment club for the richBy PETER HADEKEL, THE GAZETTE Ask the average person on the street and he or she would say thatanyone with $10 million doesn’t have much to worry about.

But the wealthy aren’t much different from the average personwhen it comes to managing their money, says John Koloda. Theyhave more to invest, but they have the same kinds of concernsabout risk, returns, diversification and wealth preservation.

Koloda heads the Montreal chapter of a group called Tiger 21,which is basically an investment club for rich people. The fee tojoin is $30,000. The minimum amount of investable assets is $10million.

The idea is to create a confidential forum for peer-to-peerexchanges, learning and information sharing, says Koloda, whohas a background in financial services and acts as the facilitatorfor the group.

Prospective new members are invited to sit in on a meeting and areasked to sign a confidentiality agreement before joining.

Founded in 1999, Tiger 21 has more than 200 members in a dozencities in North America. Members, who are entrepreneurs, CEOsand inventors, collectively manage $19 billion of their own money,putting the average nest egg at $95 million.

Entrepreneur Michael Sonnenfeldt started the group in the U.S.when he sold off personal assets and was looking for advice onhow to invest the proceeds. Tiger 21 stands for The InvestmentGroup for Enhanced Results in the 21st century.

It’s aimed at improving members’ investment acumen throughcritiques and coaching. Success, says Koloda, depends on theirwillingness to share their experiences with others.

“That’s the interesting aspect for these folks. It’s the peerexchange, it’s the transparency, it’s the trust, it’s the confidentialitythat sometimes doesn’t exist in any circle, let alone if you’re in the$10-million or more circle.

“But that’s what they get when they sit once a month and talkabout the issues they have in common. The level of trust getspeople opening up and talking at a different level.”

Those who join are often outstanding business people who havebuilt tremendously successful companies but who recognize thosesame skills do not always translate into successfully managingtheir own assets.”The issues that come up are very similar to Monsieur et MadameTout Le Monde,” Koloda says. “The topics range from: what areyou doing with your money? How’s your family situation? Whatare your kids doing?

“Divorce is often a subject that comes up, just like the rest of thepopulation, one out of two times.”

Members each provide a global perspective.

“Each one of these people comes from different networks andbackgrounds. Their view of what’s going on in the world isunique,” Koloda says.

“And there’s a significant number of philanthropic topics thatare thrown out for discussion because these folks give a lot, bothpublicly and privately.”

As the group’s name suggests, the main objective is enhancedinvestment return. The learning experience involves a portfoliodefence in which each member once a year brings forward”explicit detail” about where their money is invested and why theymade those decisions.

“They open up the kimono and go through it. The rest of the group,in a non-confrontational way, way will ask: ‚Äòwhy didn’t you do itthis way or why didn’t you get involved in that?’

If there’s an obvious gap or the perception that the portfolio is tooconcentrated in one sector, then the critiques will often expose thatand provide insight into how others do it.

A common problem is lack of diversification, Koloda says, oftenbecause someone’s portfolio is overweighted in one type ofinvestment for historical or emotional reasons.

“The key to successful investing is appropriate diversification.That comes up a lot.”

Of course, the wealthy have access to more opportunities than theaverage person and the group helps members identify alternativeinvestment strategies that may involve areas like private equity orventure capital.

“We definitely go deep into new ideas, new approaches and newways of doing things.”phadekel@videotron.ca ¬©copyright (c) the Montreal gazette