There is no shortage of advisors looking to help the rich manage their finances. The players in Canada’s financial sector continue to shift their focus to “high-net-worth” (HNW) customers. The latest example is Investors Group – this fall it rebranded as IG Wealth Management as part of a plan to capture more of the higher end of the market.
But for many high-net-worth individuals, the advice they value the most is what similarly affluent people have to say. After all, who better understands how to make money, and keep it, than a successful fellow entrepreneur?
That’s a big part of the philosophy behind Tiger 21 – a kind of social club for entreprenuers and wealthy people where they can swap investing ideas and other techniques for preserving and creating wealth. The organization has a toehold in Canada and is planning to expand. Its alternative approach could be an attractive option for some high-net-worth individuals – though it is not without risk.
Tiger 21 bills itself as a peer-to-peer learning network for high-net-worth investors – the name is actually an acronym, standing for “The Investment Group for Enhanced Results in the 21st Century.” It was founded almost two decades ago by Michael Sonnenfeldt, who cut his teeth at Goldman Sachs in New York, then became a successful real estate developer before looking for a new challenge.
“I had just sold my second company and felt in need of others who had travelled the same road before me,” he says. “Although I was enjoying significant success, I felt challenged to preserve my wealth. I found that others felt the same way and needed a peer membership organization that would prevent them from making some of the same mistakes that I had made the first time around.”
Tiger 21 started 19 years ago with a single group of six entrepreneurs in New York who had all sold their businesses. Mr. Sonnenfeldt says as the group evolved it became clear that issues of legacy, family, philanthropy and “what to do next” were on their minds, and it worked well to have peers to share views on these matters.
“Being a member of Tiger 21 is like having your own personal board of directors, powered by the collective intelligence of a group of exceptionally successful wealth creators, in a confidential setting, with no agenda but yours.”
Prospective members go through a screening process. If they are approved, the only other hurdle is the annual membership fee: $30,000. Members are legally bound by confidentiality agreements, pledging not to divulge private information disclosed at meetings. As well, the organization says it does not allow sharing of insider information that would violate any securities laws.
The Tiger 21 website says the confidential process of qualifying members also includes a comprehensive background and credit check and conversations with references, one of whom must be a CPA or other professional advisor who can provide written verification of the candidate’s financial qualifications. Alternatively, the candidate can provide statements from a financial institution substantiating investable assets in excess of $10-million.
Five Tiger 21 groups in Canada
Each Tiger 21 group of 12 to 15 members meets once a month and is led by a chair. There are more than 640 members in 53 groups in 30 locations across the United States, Canada and Europe. There are five locations in Canada – Toronto, Montreal, Vancouver, Calgary and Edmonton. They include about 90 members.
Leon Goren is the chairman of Tiger 21’s Toronto chapter. He says the essence of Tiger 21 is to provide members with an opportunity to develop their skills and abilities to be a disciplined investor, to enhance their wealth, and to achieve personal goals beyond investing. He says the group’s Toronto members tend to invest for the long term and will essentially only alter their portfolios a couple of times a year with the addition of a new investment.
“Sometimes not making a bad investment is of more value than simply investing in the public markets and/or alternative investments,” he says.
Mr. Goren shares one notable example from his Toronto group. “A few years ago a leader in the cannabis industry was invited to present to the group,” he says. “At the time there were still some very big question marks around whether cannabis would be legalized in Canada; however he did present a very strong argument about the size of the opportunity and the potential risks with becoming involved at that time. As members, we deliberated his presentation, considering the political environment and the overall risk of the investment.”
Mr. Goren says every member looked at the investment differently depending on how they managed their finances and risk profile. Over the next months a number of them did make an investment in that business through an early private placement. “Many of our members have done very well with that investment.”
While Tiger 21 has proven popular, it is not without its critics. Some experts think the dues are “very high,” and that membership might just be a status symbol.
If you are considering joining Tiger 21, it may be helpful to ask yourself a number of questions. Adrian Mastracci, senior portfolio manager at Lycos Asset Management in Vancouver, says one of the first questions should be: What are you seeking from this networking exercise?
Other points he believes should be pondered include: What is missing or in need of tweaking in your current long-term plan? Are the goals you seek aligned with the group goals? Do you have sufficient time to get the full value from the group? Mr. Mastracci notes you may have to engage new professional advisors to scrutinize the value of new advice, and there may be additional risks and complications.
Mr. Goren sums up the value of Tiger 21 as an opportunity for members to develop their skills and abilities to be disciplined investors. Mr. Sonnenfeldt notes that Tiger 21 members are roughly as successful on a comparative basis as a major league athlete – about one in 17,000. “Even the best hockey players in the world like to learn from one another and share their concerns, confidentially and out of the public eye.”