Adding New Members to Your Investment Club.
New members can reinvigorate your investment club
Once you've got your investment club up and running, it's inevitable that some of your founding members will end up withdrawing from the club. Members may move away, or change jobs and have a schedule conflict that prevents them from attending meetings, or they may lose interest all together.
Should you replace departing members with new members? And what's the best way to bring new members on board in an existing club? We talked with Joe Craig, a founder and past-President of one of the first online investment clubs, the Pioneer OnLine Investment Club.
Though they met online, the Pioneers faced most of the same issues that confront more traditional clubs, including member attrition and initiating new members. "After our club started with some 23 members, we found that nearly half of them weren't committed to working," Craig said. "Over about a year or so, they mostly left the club, or were asked to resign."
If this attrition continues, a club may soon be left with just a handful of members. The Pioneers, like most clubs, found it inevitable that they would have to accept new members to their ranks. But given the online nature of the club, it was more difficult to evaluate potential candidates for members.
The Pioneers devised a fairly simple system of initiation that new members were required to follow. "For new members, we required an apprenticeship," Craig explained. "The potential member must formally ask to join the club, submit a resume so that we can all get to know him or her, and then participate in club discussions for a couple of months. Once the member has completed those steps, they must again request to be considered. Then, we would vote (using a secret ballot) on their membership."
This procedure allows other club members the opportunity to get to know the prospective member, as well as giving the prospect a chance to "try out" club membership. Many candidates find that they're just not cut out for the club and quietly slip away into oblivion.
Craig said this initiation process is designed to work as a sort of "compatibility test" for both the club and the new member. "It gave us the chance to test a candidate's willingness to work and willingness to participate in a club,” he said.
Recruiting Experienced and
What kind of members did the Pioneers accept in their club? The Pioneers weren’t interested in only recruiting experienced investors to their club. In fact, they encouraged investing neophytes to join. "New members with lots of questions are good for all of us," Craig said. "I'd much rather have someone ask lots of questions and help all of us learn than have someone who knows everything and behaves accordingly."
The Pioneers also didn’t require new members to kick in a large initial contribution. "Our club didn’t have a buy-in," Craig explained. "We use the unit value system of club accounting. That means that anyone can contribute any amount, even new members -- provided that it exceeds the minimum ($20 a month) and doesn't mean that they own more than 20 percent of the club's assets." ICLUB Central’s Club Accounting Online can help clubs to print up-to-date reports of club holdings, member share, capital gains, and even graphs of club performance -- all online so that anyone in your club can access reports 24 hours a day with a username and password.
As far as paperwork goes, new Pioneer members signed a copy of the partnership agreement, which was sent to the club Secretary and kept on file. The members sent their check to the club treasurer, and they became official members of the club.
So what about new members who don't work out, for one reason or another? "Most people who've found that they don't fit in a club take care of the problem themselves," Craig said.