ULTRA-WEALTHY CLUB MAKES SOUTH FLORIDA PUSH

Ultra-Wealthy Club Makes South Florida PushBy Tom StabileSeptember 27, 2013

A strong ultra-high-net-worth market in South Florida is pepping up wealth managers and other groups serving high-dollar investors, thanks to a growing local economy and the return of big players jetting in from other regions of theU.S. and Latin America. The brighter prospects have already sparked a second Miami chapter of TIGER 21, a wealthyinvestors’ club, and will soon spawn a third that is set to launch nearby in Palm Beach, Fla.

TIGER 21 opened its first Miami market chapter in 2007, one of only seven U.S. and four Canadian cities where it hasits 220 members, who have $20 billion in assets combined. The two Miami clubs now have a combined 20 members,and the group expects to add 10 to 14 people in Palm Beach later this year, says Charles Garcia, who chairs TIGER 21’seffort in the region and is CEO of Garcia Trujillo, a consulting, merchant banking, and venture capital firm.

“Groups in [nearby cities] Boca Raton, Jupiter, and Wellington could come later,” he says. “These are strong pockets ofwealth.”

Garcia says the region has good fundamentals for TIGER 21, with more than 1,000 people who have a net worthtopping $50 million in Fort Lauderdale and Miami alone.

“We’ve just got momentum,” he says. “There’s a lot of room for growth.”

The market looks stronger in part because of its rebound since 2008, when a local real estate bubble burst, says BrentFykes, senior investment partner at GenSpring Family Offices. “That impacted Florida, and especially South Florida’swealth in a lot of ways,” he says.

Part of the damage from the financial crash was that it dampened the flow of economic activity from the seasonal “snowbirds” coming to Florida from the Northeast and Midwest. It also deeply hurt local investment and economic activity,which stayed thin through 2009 and only started to pick up in 2010, he says.

Last year finally brought back a “more hectic, fast-paced market,” Fykes says. “You really noticed it, on the real estateside and in opportunities to win high-net-worth and ultra-high-net-worth clients. We get numerous calls from wealthfirms that are looking to set up shop in the area. The sheer numbers [of prospects] and volume has really ramped backup the last two or three years.”

Growth is back in the conversation across all four of the wealthy client segments in the South Florida market, says JulieNeitzel, partner at WE Family Offices, which launched this year with several partners who split off from GenSpring. Shesays each of those four groups ‚Äì local entrepreneurs, residents of the Northeast and Midwest, “crossover” wealth fromfamilies with both U.S. and foreign roots, and fully off-shore wealthy investors ‚Äì have strong prospects, but for differentreasons.

The entrepreneurs are back in business largely because of the improved economy, including a recharged real estatemarket, she says. The region may also see more high-net-worth individuals from other U.S. regions move permanentlyto low-tax Florida, fleeing higher taxes set to take effect in places like New York. The crossover community is simply expanding as more far-flung wealthy families spread their roots to Miami. And the offshore set is coming from a relativelybooming Latin America, where eager investors “enjoy having a piece” of South Florida through real estate and their portfolios,she says.

“The statistics on Florida real estate sales in 2012 show that almost one out of every three real estate residential purchases wasby an offshore individual,” Neitzel says. “And it’s not just happening on the residential front. There is a fair amount of commercialinvestment with offshore capital, too.”

The better times have translated into more opportunities to win clients, GenSpring’s Fykes says. “We’ve seen new clients pickup in the last 12 to 18 months,” he says, citing activity across Miami-Dade, Broward, and Palm Beach counties.

TIGER 21’s members are especially active in the local market, including several who are in the financial services arena, Garciasays. The members include two financial advisors ‚Äì one fromMerrill Lynch, the other UBS Wealth Management Americas, eachof whom run billions in client assets ‚Äì as well as former Wall Street analysts, trust lawyers, and hedge fund market players.

“There’s a lot of brain power in these groups,” he says. “We’re also starting to get Latin American members who will fly intoMiami for the day.”

Each of the members brings expertise from different industries to the group, which features various formats for sharing theirknowledge and insights about investing, philanthropy, estate planning, and managing family wealth. Most of them have multiplefinancial advisors, Garcia says.

The group’s regular activities include meetings with external experts, such as a recent set of presentations on investing in China,with a fund manager from Sanford Bernstein and a hedge fund manager from Austin, Texas offering opposing viewpoints,followed by a discussion among the group’s members. Other recent sessions featured a Blackstone fund manager talking aboutdistressed real estate and a presentation on cyber-security that turned into a conversation about unique investing opportunitiesin that growing industry.

“We have a couple of members who are active in the oil sector, who have been keeping us abreast with what’s happening, andhow growth in our export capacity is going to affect the whole economy,” Garcia adds. “People are already placing five-yearbets on companies that are going to benefit. We brainstorm through investment ideas to find ways to position a portfolio to getmore exposure on those themes.”