Think back to one of your very first jobs. Whether it was scooping ice cream at the local Baskin-Robbins (my first job), or a position that required professional training or a college degree, you likely entered the world of work with more enthusiasm than knowledge. Your employer knew when he or she hired you that it was going to take some time for you to learn the ropes – whether that meant making the perfect chocolate malt or mastering the company’s inventory system. In other words, you were an “investment” – and your employer was betting that in time, his or her investment in you would pay off.
It’s much the same with an investment club. Just like a company, investment clubs welcome new members for the breath of fresh air and new ideas that they bring with them, while also hoping that, in time, they will absorb the world of investing, roll up their sleeves and begin working alongside them, studying stocks and making presentations.
Too much, too fast
That’s the ideal scenario. But, suffice it to say, it doesn’t always work out that way – either in the real world or in an investment club. Such was the case with the Crow River Investment Club in Minneapolis, Minn. “We nearly doubled our club membership in 2007, going from nine members to 15,” explains Club Vice President Lynn Ostrem. “Then, just recently, and very suddenly, we lost three of the six new members.
“Did we miss seeing something in the departing three that could have prevented us from inducting them, in the first place?” Lynn now asks herself. “Could we have done something differently, in the beginning, to motivate them into wanting to learn this stuff? And when we see that someone isn't working out, how can we move them to a resolution faster?”
Though mentoring newbies has always been a top priority for the club, Crow River members now take a more structured approach to the orientation process. “Pre-Orientation should be part of any mentoring program,” Lynn says. “It’s imperative that a prospective club member knows what he or she is getting into.”
As part of the club’s Pre-Orientation process, Lynn created a series of PowerPoint presentations that introduce the prospective member to everything from the club’s philosophy to the Partnership Agreement and By-laws, the club’s website (www.bivio.com/crowriver) and software tools, and member commitments, from stock presentations to serving as a club officer. “All of these files are placed on one CD and given to the prospective member after his or her second (of the three required) meeting,” Lynn says. “Members know exactly what’s expected of them – and what they can expect in return – before they ever join the club.
“Setting the expectations and getting would-be members to commit to them, in advance, is important to us, because mentoring takes a lot of time and effort. We certainly don't mind putting in the time, but we don't want to start the process only to have that person discover that a club is not what they thought it would be, then leave after a few short months.”
Teaming up
“Newbies should be assigned to a mentor who performs every single task with him or her for at least one year,” Ostrem says. “Teaming up provides solid leadership and teaches the newbie how to properly prepare. In the end, everyone benefits.”
Of course, as dedicated as Lynn is, she is only one person with, yes, only 24 hours in a day. And though she devotes many of those hours to her club and in particular, to mentoring newbies, when the club’s membership exploded last year, Lynn knew the club needed a more structured approach.
“We provide training in the beginning, and we keep our lines of communication open. I, personally, make myself available anytime, anywhere, to any newbie who needs or wants to get together to work on club projects or the software.”
Lynn, who will be teaching at her first national event, InvestEd 2008, next month and is currently developing a mentoring program for StockCentral/ICLUBcentral member clubs in Minnesota, offers the following step-by-step approach to mentorship within an investment club:
1. Find a Willing Participant
Though on the surface, this seems obvious, Lynn points out that it’s one of the first signs that an investment club isn’t a good match for the newbie’s interests. “Sometimes people join a club because they realize they need to shore up their retirement and learn how to invest,” she says. “They don’t have a natural interest in investing – they’d prefer to be doing something else. The club activities become a “have to” instead of a “get to.” And no amount of energy expended on these members will make them giddy over stock reports and SSGs.
“Some newbies are constantly putting the veterans among us through our paces – which is a good thing! But some of them are slower to pick up on the tools, and are not reaching back when we offer to help. No one should join a club if they’re not willing to be mentored.”
2. Do as I Do
Step 2 of the process is what Lynn refers to as “Follow the Leader.” “A mentor and a newbie should be joined at the hip,” Lynn says. “These two people should work together as a team, sharing stock studies and watching stocks, reviewing the news and numbers on their shared stocks and discussing the relevance of that information before each meeting.
“They should also review the club’s portfolio together and decide which information they will share in the meeting together. This is the type of hand-holding that will bring a new member up to speed very quickly – and in the process, you’re creating another person who will perpetuate that training.”
3. Trust the Process
“They have to trust the process and believe that the method of investing that we’re teaching works before they know it works – the same way each of us did at the beginning,” Lynn says. “We can’t teach them all they need to know in the first two or three months.”
4. Clarify Expectations
All of us had a teacher who was there to remind us that learning is a lifetime process, but…there are also milestones along the way. Lynn offers these guidelines for mentors and their newbies:
Three months…Lynn’s club’s rule of thumb is that a prospective club member must attend at least three regular club meetings before the club and its guest decide whether or not it’s a match.
Six months…“I usually give a newbie six months before I ask for his or her active participation,” Lynn says. “By seven or eight months, a new member should be able to complete a Stock Selection Guide. A new member ought to be able to give something back after six months,” Lynn says. “This is the time to ferret out those people who pay dues, and take, take, take, but don’t give back.”
There’s a flip side to this problem. “If you’ve got a club of 11 members, but only three are doing SSGs on a regular basis – who are you going to match your newbies up with?” Lynn points out. A club’s own mentoring program, then, not only has the potential to identify newbies who aren’t a good fit for an investment club, but also the club’s more established members who are slacking.”
One year…By the time a newbie celebrates his or her first anniversary with the club, they’ve had a full year to sit back and learn the Toolkit, the club’s processes, the club’s software. “After one year, a new member should be able to participate fully in all club activities, discussions, generate intelligent preparation, and get involved in education and stock study. He or she should be signing up for stock presentations and committees.
Magical words
“The best club members ever are the ones who, in between meetings, call you with questions.” That’s been the case with Lynn and the newbie she mentors – club member Dan Vitez. “Dan will call me when he’s doing SSGs, and before and after every meeting so that we can review stocks and update SSGs together,” Lynn says. “I love it when he calls and says, ‘I hate to bother you, but…’ and I know we’re about to launch into a stock discussion. I’m his go-to person, as it should be.”
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