WEALTH MANAGER-Millionaire support group skeptical of advisers

By Helen Kearney

NEW YORK, April 30 (BestGrowthStock) – Financial advisers aiming to
recruit members of a self-help group for multimillionaires
called TIGER 21 should be afraid, very afraid.

An exclusive club whose members must have at least $10
million in investable assets and pay $30,000 a year, TIGER 21
is a veritable beehive of skepticism about the industry that
wants to get its hands on their money.

“Most of our members think 25 percent of advisers are
talented and add value, but the other 75 percent are primarily
motivated by their own gain,” the group’s president, Jonathan
Kempner, told Reuters. “In TIGER 21, members help each other
identify those 25 percent.”

Members of TIGER 21, or The Investment Group for Enhanced
Results in the 21st Century, get their advice from a
gold-plated roster of guest speakers: billionaire corporate
raider Carl Ichan, Blackstone Group (BX.N: ) Chief Executive
Stephen Schwarzman, oilman T. Boone Pickens and money
management giant Jeremy Grantham have all appeared at group
meetings.

The group was formed over a decade ago by Michael
Sonnenfeldt, then a 43-year-old real estate entrepreneur who
had recently sold his business and felt he did not have the
necessary skills to protect his windfall.

“I spoke to advisers, brokers and lawyers, but I felt that
everyone had something to sell me … they were just concerned
about which of their products fit my particular challenge,” he
said in an interview.

Sonnenfeldt had previously been a member of a CEO group
that met monthly to swap ideas on management, and he recruited
fellow members who had also sold businesses to start a group
that could support them through the next stage of life.

“I really just wanted to get a community of peers into the
room to have an open, honest conversation,” he said.

TIGER 21, which started in New York, now also has multiple
groups in Miami, Dallas, San Diego, San Francisco and Los
Angeles, and expects to start a group in Washington, D.C., in
May. There are 12 to 14 members per group.

DEFEND YOURSELF

The idea is wealthy businessmen have a lot of knowledge to
share about the markets, investments and other issues unique to
the rich. Members discuss family issues, raising children to
deal responsibly with wealth and donating to charities.

“It’s difficult to discuss issues of wealth with friends or
neighbors,” said Los Angeles-based member Mark Kress. “In this
group I can see how other people with wealth live and how they
deal with generational issues.”

Each month, one member of the group gives a “portfolio
defense” laying open his or her entire portfolio of investments
for other members to examine.

Kress, founder of a company that makes treatments for hair
loss, recalls that his first portfolio defense was “brutal.”

The other members told Kress he had too many small
investments to keep track of, and he would only get a mediocre
returns at best.

At the time, Kress had two financial advisers, one at
Merrill Lynch & Co and another at Bear Stearns Cos. He said the
advisers were aware of his investments outside of their
individual firm but did not seem very interested in them.

“I felt their emphasis was on their own products and they
weren’t totally serving my needs,” he said. “And there was a
lot more emphasis on buying than selling.”

Kress now uses a family office adviser recommended by other
members of the group and is pleased with his performance.

Tommy Gallagher, a former senior executive of Wall Street
brokerage Oppenheimer & Co, is even more skeptical of
advisers.

After a 40-year career on Wall Street, starting out as a
runner at the New York Stock Exchange and rising to vice
chairman of Oppenheimer, Gallagher, 65, said that since
retiring in 2001 his main job is managing his own money.

“I don’t think financial advisers are demons, but you have
to remember they are being compensated by putting you into
certain asset classes and, for the most part, they don’t have a
full understanding of your portfolio,” he said.

Gallagher uses a number of money managers, whom he selects
himself. He has a significant investment with James Belcher of
Balestra Capital, whom he met when Belcher was a guest speaker
at a TIGER 21 meeting and he shared his doubts about the
stability of the subprime mortgage market.

“I chose him because he sees the world in a similar fashion
to me and he knows how to make money in those conditions,” he
said. Gallagher says that Belcher’s bet against subprime
largely shielded his portfolio during the downturn.

And if you impress a member, the payoff can be huge.

“There are a handful of advisers who have 10, 20, 50 TIGER
members as clients. They started with one happy client who
introduced them to the group,” said Sonnenfeldt.

Investing Analysis
(Reporting by Helen Kearney; Editing by Steve Orlofsky)

WEALTH MANAGER-Millionaire support group skeptical of advisers