The peer group for the ultra-affluent hired Julie Garella, investment banker consultant, to chair (and grow) membership in the sudden-wealth zone of America

August 14, 2012 — 3:43 AM UTC by Kelly O'Mara


Brooke’s Note: I like TIGER 21 and I like the direction that it’s headed. What I like about this group is that it gives consumers who are privileged — but, yes, also burdened by — amounts of money that the skinniest of fraction of humanity has ever had to be stewards of, a place to compare notes. And I suspect that one major item they compare notes on is to whom they choose to trust help them make the unending decisions that come with holding so many assets. I believe that the more wealthy people compare notes on financial advisors that the better the RIA business will grow and evolve. What I like about where TIGER 21 is headed is toward greater growth, i.e. creating wider networks of notes-sharing individuals, a catalyst for understanding the advantages of professional, accountable advice. Here TIGER 21 comes to San Francisco, the seat of the RIA world, with a new and better community organizer if you will. Julie Garella can help the richest people understand some of the big transactions that come down when you exist in a world of big bucks. It’s hard to imagine a big downside here for either side.

Julie Garella has had a prolific career as an investment banker. She was senior vice president at CitiGroup and head of the global market capital strategies division. Before that, she co-founded Fairview Capital, an investment banking and venture capital firm; Carnegie Capital Advisors, an investment advisory firm specializing in illiquid investments; and McColl Garella LLC, an investment banking firm, with Hugh McColl, the former chairman of Bank of America.

In 2007, she left behind the corporate world to start her own investment and financial advisory consulting firm, called Grayhorse Capital Partners, which provides M&A and recapitalization services for high-net worth individuals and private companies.

Now, she finds herself in the enviable position of being the newly appointed chair of the San Francisco chapter of TIGER 21, a investment and peer education group for high-net worth individuals — those with exactly the type of problems Garella advises on at her consulting firm. See: Why the San Francisco Bay area is almost certainly the capital of the RIA business.

It’s a group “most advisors would give their left arm to be in front of,” says Tim Welsh, president of Nexus Strategy. And, being chair can’t be bad for business.

Dream job

TIGER 21 [full name: The Investment Group for Enhanced Results in the 21st Century] is made up of high-net worth individuals with at least $10 million in investable assets. The organization aims to provide support and information on the kinds of problems that only the rich have. And, chairing a chapter would seem like a windfall for any financial advisor aiming to serve the ultra-wealthy.

That can be true even if there is no direct solicitation.

Garella says that gaining business or clients is “completely not the purpose” of being chair and she has no intention of seeking business from members. But, Welsh points out that even without directly selling oneself, the connections can still be valuable because people like to do business with people they know and making contacts through an organization like TIGER 21 “builds credibility” within the network of high-net worth investors. See:Tiger 21 members have shifted priorities in choosing who manages their investments.

In fact, he says, for high-end organizations like TIGER 21 the benefit comes solely from that kind of visibility and networking, because “no one in their right mind” would try to make direct pitches selling their products or services to members. “That would be crazy,” he says, because it would make an advisor look bad, create conflicts-of-interest, and most likely generate backlash.

This kind of visibility-building is actually not uncommon at lower levels either, he says, where volunteers for many financial organizations will be wholesalers or those otherwise connected with the industry.

In fact, the benefits go both ways. Garella’s successful practice is helpful to the TIGER 21 members, says TIGER 21 president Jonathan Kempner, as she’s able to offer expertise and knowledge to go with her rolodex. It was Kempner who reached out and asked Garella to chair the San Francisco chapter — a job for which she’s being “paid very well,” says Kempner.

The hope is that she can leverage her knowledge and contacts to pump up a chapter that has been lagging in recent years. The former chair of the San Francisco chapter actually lived in San Diego and flew up once a month, which made it hard for him to recruit members and speakers and became simply too taxing.

What $30,000 gets you

Although TIGER 21 has lofty goals, chief among them creating a learning network for high-net-worth individuals and providing support in candid discussion forums, it is not a charitable organization. Members pay $30,000 annually to join TIGER 21 and must have at least $10 million in liquid assets ready to invest. TIGER 21 has about 200 members nationwide, who have $18 billion in total assets. Those members often made their money in industries like real estate, finance, retail, entertainment, legal services, and medicine. And while the average age is around 50, says Kempner, members range from 20- to 70-years-old. See: Russell Investments and Fidelity both see disconnect between HNW investors and RIAs in separate studies.

For such investors, $30,000 is “in the scheme of things, quite modest,” says Kempner. There are plenty of people nationwide, he says, who are willing to pay, but either don’t become members because they aren’t a good fit or because they realize they can’t quite afford it.

The $30,000 buys membership into the organization, which has chapters in most major cities in the country. It also pays for support staff in New York, who help coordinate speakers on topics members want to hear more about and provide educational packets and information on investment topics. It pays for qualified chairpersons to run and plan meetings and vet new members. And, every member is invited with their families to the annual conference, which this year was held in ??? and had speakers like George Roberts, Cal Ripken Jr., Howard Marks, and Tim Draper.

The members are willing to pay, because the problems of the uber-wealthy are not the same problems of the rest of us.

Many times when people sell a business or have large amounts of liquid assets, says Kempner, they don’t necessarily know how to deal with that money. Just because they were good at running a company, doesn’t mean they know how to run their personal finances. And, frequently, it’s hard to turn to relatives or friends, because they aren’t having the same problems and don’t necessarily want to hear about the complex tax questions from owning multiple companies or what to invest an extra $1 million in.

“TIGER 21 is focused on helping people who’ve created liquidity,” says Garella. Once you sell your business, that’s great, but “you have a whole new set of problems.”

The city by the bay

The organization has chapters in New York, Los Angeles, San Deigo, Washington D.C., Miami, Dallas, Toronto, Vancouver, and Montreal — most with 10-14 members and some places with multiple chapters. But, although the San Francisco chapter of TIGER 21 was established in 2006, it has just six members.

There are certainly a large number of qualified investors in the Bay Area, says Kempner, and it would seem the perfect place for a group focused on education and thought-provoking discussion. See: Why the San Francisco Bay area is almost certainly the capitol of the RIA business.

He believes that while the former chair was well-connected and worked hard, flying up from San Diego every month for the meetings simply didn’t lend itself to fostering a sense of community and making connections throughout the region that would help the chapter grow. Kempner is hoping Garella will change that. She will look to add four to eight new, qualified members, possibly start additional chapters in Silicon Valley and Sonoma/Napa, and organize meetings with top speakers and investment opportunities.

Garella moved to Sonoma, just outside San Francisco, after starting Grayhorse. Grayhorse primarily serves a handful of privately held companies and high-net worth individuals, who look very similar to the members of TIGER 21, but also has family offices who ask Garella to consult on deals or transactions for their clients.

Jonathan Kempner: We are not investment advisors.
Jonathan Kempner: We are not investment

Since moving there, Garella says it’s amazing how many incredibly intelligent, incredibly wealthy people there are in the San Francisco Bay Area — making it ideal to grow the TIGER 21 chapter. But, in order to get those intelligent, successful —and busy people to join TIGER 21 and want to spend their time at meetings, Garella’s has to give them something worth taking up their time.

“I want to create meetings where you go 'Wow, I’ll give up a day to meet with these people and talk about those issues,’” says Garella.

Defend yourself

A typical TIGER 21 meeting, says Kempner, usually includes one or two speakers on investment topics. Speakers are picked from a stable of presenters who have been well-received at other panels. Understandably, it’s not hard to get people interested in speaking to a group of wealthy investors. “The presenters line-up to present,” says Kempner. But, while members are welcome to invest with a speaker, the speeches that are purely sales pitches “go over poorly,” he says.

After a presenter speaks for 20 minutes or so, members will ask questions for 20 minutes — typically an opportunity for tough questions, says Kempner, and then the speaker will leave the room and the members will dissect the presentation among themselves for 20 minutes.

Meetings can also include something known as The Portfolio Defense.

In a session of portfolio defense, one member presents their portfolio, goals and strategies to the others, who offer feedback — sometimes brutal feedback. One TIGER 21 member might say they want to invest more in real estate. As the group looks through that member’s portfolio, they would critique different real estate endeavors or, perhaps, point out that in reality very little of the assets are actually in real estate. Another group member might suggest a development that would offer a better investment opportunity.

Although the members aren’t professional investment advisors, Kempner says that’s the point. They’re able to each bring their own expertise and offer advice that isn’t conflicted by their own interests.

“We are not investment advisors,” says Jonathan Kempner. “The cumulative effect is that you just get tremendous insight.”

Checks and balances

While there are good advisors, he concedes, many are offering conflicted advice or have their own interests in mind. Most of the members of TIGER 21 do have professional financial managers and advisors in addition, but being able to get advice from and talk to people going through the same things offers “good checks and balances,” he says.

Garella says she was attracted to the organization by the idea of learning and talking more about the same issues and topics she works with clients on. And, the atmosphere at TIGER was a particular draw, she says.

“TIGER has created a very unique and dynamic environment,” says Garella.

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