Sharing Knowledge Drives Investment Club for the Rich

The Montreal Gazette

July 9, 2013

Ask the average person on the street and he or she would say that anyone with $10 million doesn’t have much to worry about.

But the wealthy aren’t much different from the average person when it comes to managing their money, says John Koloda. They have more to invest, but they have the same kinds of concerns about 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 to join is $30,000. The minimum amount of investable assets is $10 million.

The idea is to create a confidential forum for peer-to-peer exchanges, learning and information sharing, says Koloda, who has a background in financial services and acts as the facilitator for the group.

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

Founded in 1999, Tiger 21 has more than 200 members in a dozen cities in North America. Members, who are entrepreneurs, CEOs and 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 on how to invest the proceeds. Tiger 21 stands for The Investment Group for Enhanced Results in the 21st century.

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

“That’s the interesting aspect for these folks. It’s the peer exchange, it’s the transparency, it’s the trust, it’s the confidentiality that 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 talk about the issues they have in common. The level of trust gets people opening up and talking at a different level.”

Those who join are often outstanding business people who have built tremendously successful companies but who recognize those same skills do not always translate into successfully managing their own assets.

“The issues that come up are very similar to Monsieur et Madame Tout Le Monde,” Koloda says. “The topics range from: what are you doing with your money? How’s your family situation? What are your kids doing?

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

Members each provide a global perspective.

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

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

As the group’s name suggests, the main objective is enhanced investment return.

The learning experience involves a portfolio defence in which each member once a year brings forward “explicit detail” about where their money is invested and why they made those decisions.

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

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

A common problem is lack of diversification, Koloda says, often because someone’s portfolio is overweighted in one type of investment 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 the average person and the group helps members identify alternative investment strategies that may involve areas like private equity or venture capital.

“We definitely go deep into new ideas, new approaches and new ways of doing things.”

phadekel@videotron.ca