Institute of Private Investors
The Institute of Private Investors is a social institution of high net worth individuals who can share their experiences and learn from each other without getting worried about conflict of interest.
This institution was started in America by Charlotte Beyer in 1991 to help private investors address the issue of wealth management, investing and the office. The need for such an organization was felt by many family owned enterprises as businesses passed from one generation to another bypassing the institutional thought process. The criteria were established to make the membership exclusive and private so as give it sanctity and respect of its peers who are rich and famous. The basic qualification to join the institute of private investors is your net worth must be at least 30 million US dollars.
The joining member has to be recommended by the existing institute member so as to make the entire process transparent and mutually beneficial. The members’ personal details such as names, addresses, and telephone numbers are not released to any other members of the exclusive institution. This confidentiality clause is so stringent that the institute of private investor does not publish its membership for the public.
Another important reporting that is expected annually from the members is revealing its affiliations. It means the member has to report about its business interests and stakes in various enterprises. This called as safe harbor norm in parlance of the institute of private investors becomes useful in deciding type of membership allocated to the private investor.
The institute’s membership is divided in to two categories: 1. Ivory snow Member 2. Non-ivory snow member. This means ivory snow member is the one who does not conduct his business with non-family clients or associates with hedge funds or runs advisory services. Those who participate in such activities are known as dual members. More than 90% members belong to Ivory snow member category making one clear about the hold of family enterprises in the institution.
There are around 1100 members from 18 countries participating in the Institute of Private Investors. The members are charged up to 9000 US dollar annual membership fees by the institute. The members belong to 367 business families and they collectively oversee in excess of US$50 billion worth assets.
The members of the institute are further categorized in to three types: Principal, Family Office Executive and Proxy. Each of the type carries specific meaning related to his role defined by the institute’s charter. The first type i.e. Principal means a family member, founder of the business and decision maker which is optional. Second type is an executive paid to look after the affairs of the family business and investments. Lastly, proxy member who represents the family interests as trustees.
The institute of private investors undertakes various activities to assist the members in creating wealth as well as allows them a platform to share their ideas and experiences with others. The following educative programmes are conducted by the institute: 1. Investor conversation on Memeberlink 2. Member Round tables 3. Destination Programs. The Memberlink is an online social IPI community which allows the select group to communicate with each other on the issues concerning adviors and money managers. At any point in time at least one members of the business family is online to share their views on current interest to investors. The sanitized synopses of these conversations among the members excluding personal details are shared with all the members every month.
The member round tables are mini board room meetings conducted by small group members to consult each other on mutual concerns regarding investments and wealth management. In this group discussions absolute secrecy is maintained and members sometime further divide themselves for closed door talks. The Institute of Private Investors also conducts trips outside United States to investigate investment opportunities abroad. The trip provides impetus to international commerce and trade. These types of tours are called Destination Programmes. The institute has taken IPI members to Hong Kong, Argentina, UK, Morocco, Russia, China and India to source investment opportunities.
In New York and California the Institute of private investors organizes five two-day economic forums annually for the private investor members. This provides the member opportunity to come face to face with their compatriots who have similar worries and anxieties.
The institute’s positive role in engineering variety of discussions towards wealth creation means it bars many of the formal channels which otherwise play vital role in wealth creation. The IPI will not allow chartered accountants, investment advisors and economists to participate in any of IPI forums. There is no advertising or attempt to publicize the activities of this closely held community.
The role of IPI rose to prominence in recent times after economic meltdown in the west. The established business houses found themselves in thick of financial crises which required to divergent thinking. The business leaders looked at the IPI as an advisory body to help protect their wealth.
However the institute of private investors’ principal role of supporting the business enterprises to undertake transition of wealth from one generation to another can never be underestimated. The change in the business scenario can happen unexpectedly which may require the business leaders to prepare in advance. The advance preparation to secure their wealth and assets remains primary concern of the business community.
The IPI plays the role of teacher to many green horns of newly found rich as well as old established industry chieftains to guard their wealth and to be more choosey in buying financial services.
In 1999, the IPI began new effort to enhance the knowledge of its members. It started Private Wealth Management programme in association with The Wharton School, USA, a world renowned management training institution to teach decision making processes in management and wealth creation. This course has picked up the momentum, as more than 500 investors belonging to 30 countries have till date graduated in this five day residential programme conducted twice a year.
A similar a curriculum in Wealth Management has now on offer from Stanford University to further the cause of effective wealth consolidation and safekeeping