I have gotten conflicting advice on how to handle member payments made in advance. So I'm asking for your thoughts.
Our Operating Agreement states: "Members must invest a minimum of $25.00 per month to their capital account, payable at each regularly scheduled meeting. Members may make more than the minimum annual investment of $300.00 per year."
Several of our members make monthly payments of more than $25.00. Also, several members pay their $300.00 in one or two payments each year. These payments have been processed as payments only for the month check was received. This is how the previous treasurer handled these payments
To make sure each member has paid $300.00 by year end the bivio Member Status report is checked beginning in October so members can be reminded if $300.00 has not been paid. We don't meet in December so the final payment must be paid at the November meeting.
Should I continue handling member payments in this way or should I be applying them to future months?
Thanks for all your help.
--
Carolyn Sturgis
John W Ranby Trustee PGM Cariboo Trust on
Carolyn:
I would change your question. Ask, how do you want to
handle payments; then change the wording to the partnership
agreement to conform with the practice. Would the club be
happy if every one paid $300 in January so the club had no
new money to invest for the rest of the year? Or is the idea
to have an even in-flow of money over the year to result in
new investment funds throughout the year?
I never liked the idea of advance payments. We have auto pay
so the money flows monthly from the members bank accounts to
the club's brokerage account automatically. If the member
wants to add additional money, he gives me a check. All
money buys units in the month received.
In the case of your club, the partnership agreement could
read as follows if you want to keep the historic practice:
Members shall invest a minimum of $300 per calendar year;
payable in amounts of not less than $25.00 not later than
the November meeting. Payments will buy units in the month
received. The minimum amount shall be pro-rated for new
members.
The current language could be interpreted to require a
payment every month, even if the member has paid over $300
so far. It also sounds like your current practice allows
folks to become delinquent in the monthly amount so long as
they make it up by November. If everyone paid their $300 in
November would that be acceptable?
My bottom-line advice: talk with your members to find out
what is acceptable to the group and then amend the language
of your partnership agreement to match. There is no "right"
answer; only what works for your group.
Cheers, Jack
Carolyn Sturgis on
Jack,
Thank you for your comments. It answers my question.
Carolyn
Sent from my iPhone
> On Sep 19, 2021, at 5:11 PM, John W Ranby Trustee PGM Cariboo Trust via bivio.com <user*15792700001@bivio.com> wrote:
>
> Carolyn:
>
> I would change your question. Ask, how do you want to
> handle payments; then change the wording to the partnership
> agreement to conform with the practice. Would the club be
> happy if every one paid $300 in January so the club had no
> new money to invest for the rest of the year? Or is the idea
> to have an even in-flow of money over the year to result in
> new investment funds throughout the year?
>
> I never liked the idea of advance payments. We have auto pay
> so the money flows monthly from the members bank accounts to
> the club's brokerage account automatically. If the member
> wants to add additional money, he gives me a check. All
> money buys units in the month received.
>
> In the case of your club, the partnership agreement could
> read as follows if you want to keep the historic practice:
>
> Members shall invest a minimum of $300 per calendar year;
> payable in amounts of not less than $25.00 not later than
> the November meeting. Payments will buy units in the month
> received. The minimum amount shall be pro-rated for new
> members.
>
> The current language could be interpreted to require a
> payment every month, even if the member has paid over $300
> so far. It also sounds like your current practice allows
> folks to become delinquent in the monthly amount so long as
> they make it up by November. If everyone paid their $300 in
> November would that be acceptable?
>
> My bottom-line advice: talk with your members to find out
> what is acceptable to the group and then amend the language
> of your partnership agreement to match. There is no "right"
> answer; only what works for your group.
> Cheers, Jack
ira smilovitz on
I agree with Jack - figure out what your club wants to do and adjust your partnership agreement accordingly.
FWIW, my club "expects" a regular contribution of $x each month, but we don't require it. We do not accept advance deposits. If a member contributes more or less, that member gets credit for the number of units that contribution purchased on that date. Yes, this means we may not have a steady influx of cash each month. We have learned to live with that. We have found that with $0 commissions, it really doesn't matter if we have $100 or $1000 (or more) to invest.
Ira Smilovitz
On Sun, Sep 19, 2021 at 5:11 PM John W Ranby Trustee PGM Cariboo Trust via bivio.com <user*15792700001@bivio.com> wrote:
Carolyn:
I would change your question. Ask, how do you want to
handle payments; then change the wording to the partnership
agreement to conform with the practice. Would the club be
happy if every one paid $300 in January so the club had no
new money to invest for the rest of the year? Or is the idea
to have an even in-flow of money over the year to result in
new investment funds throughout the year?
I never liked the idea of advance payments. We have auto pay
so the money flows monthly from the members bank accounts to
the club's brokerage account automatically. If the member
wants to add additional money, he gives me a check. All
money buys units in the month received.
In the case of your club, the partnership agreement could
read as follows if you want to keep the historic practice:
Members shall invest a minimum of $300 per calendar year;
payable in amounts of not less than $25.00 not later than
the November meeting. Payments will buy units in the month
received. The minimum amount shall be pro-rated for new
members.
The current language could be interpreted to require a
payment every month, even if the member has paid over $300
so far. It also sounds like your current practice allows
folks to become delinquent in the monthly amount so long as
they make it up by November. If everyone paid their $300 in
November would that be acceptable?
My bottom-line advice: talk with your members to find out
what is acceptable to the group and then amend the language
of your partnership agreement to match. There is no "right"
answer; only what works for your group.
Cheers, Jack
Carolyn Sturgis on
Ira,
Thank you for the input. As treasurer, I want to make it as easy as possible for me.
I agree with Jack - figure out what your club wants to do and adjust your partnership agreement accordingly.
FWIW, my club "expects" a regular contribution of $x each month, but we don't require it. We do not accept advance deposits. If a member contributes more or less, that member gets credit for the number of units that contribution purchased on that date. Yes, this means we may not have a steady influx of cash each month. We have learned to live with that. We have found that with $0 commissions, it really doesn't matter if we have $100 or $1000 (or more) to invest.
Ira Smilovitz
On Sun, Sep 19, 2021 at 5:11 PM John W Ranby Trustee PGM Cariboo Trust via bivio.com <user*15792700001@bivio.com> wrote:
Carolyn:
I would change your question. Ask, how do you want to
handle payments; then change the wording to the partnership
agreement to conform with the practice. Would the club be
happy if every one paid $300 in January so the club had no
new money to invest for the rest of the year? Or is the idea
to have an even in-flow of money over the year to result in
new investment funds throughout the year?
I never liked the idea of advance payments. We have auto pay
so the money flows monthly from the members bank accounts to
the club's brokerage account automatically. If the member
wants to add additional money, he gives me a check. All
money buys units in the month received.
In the case of your club, the partnership agreement could
read as follows if you want to keep the historic practice:
Members shall invest a minimum of $300 per calendar year;
payable in amounts of not less than $25.00 not later than
the November meeting. Payments will buy units in the month
received. The minimum amount shall be pro-rated for new
members.
The current language could be interpreted to require a
payment every month, even if the member has paid over $300
so far. It also sounds like your current practice allows
folks to become delinquent in the monthly amount so long as
they make it up by November. If everyone paid their $300 in
November would that be acceptable?
My bottom-line advice: talk with your members to find out
what is acceptable to the group and then amend the language
of your partnership agreement to match. There is no "right"
answer; only what works for your group.
Cheers, Jack
--
Carolyn Sturgis
John Munn on
The easiest approach would eliminate a monthly minimum, tracking payments and late payment penalties, but credit members' contributions either as they are received or
on a monthly meeting date.
Set an expectation such as $25 monthly, but don't require it, because requiring it requires tracking payments. If someone misses a payment, so what? Bottom line is that their lapsed contribution does not hurt the partnership, it just means their investment is reduced and if/when a lapsed contribution is received, it will purchase units at the current value. This is supposed to be fun. If application of late payments and penalties and excessive administration and rules take the fun out of your club experience, remove them. They add no value, treat people like children and often serve no real purpose.
I agree with Jack - figure out what your club wants to do and adjust your partnership agreement accordingly.
FWIW, my club "expects" a regular contribution of $x each month, but we don't require it. We do not accept advance deposits. If a member contributes more or less, that member gets credit for the number of units that contribution purchased on that date. Yes, this means we may not have a steady influx of cash each month. We have learned to live with that. We have found that with $0 commissions, it really doesn't matter if we have $100 or $1000 (or more) to invest.
Ira Smilovitz
On Sun, Sep 19, 2021 at 5:11 PM John W Ranby Trustee PGM Cariboo Trust via bivio.com <user*15792700001@bivio.com> wrote:
Carolyn:
I would change your question. Ask, how do you want to
handle payments; then change the wording to the partnership
agreement to conform with the practice. Would the club be
happy if every one paid $300 in January so the club had no
new money to invest for the rest of the year? Or is the idea
to have an even in-flow of money over the year to result in
new investment funds throughout the year?
I never liked the idea of advance payments. We have auto pay
so the money flows monthly from the members bank accounts to
the club's brokerage account automatically. If the member
wants to add additional money, he gives me a check. All
money buys units in the month received.
In the case of your club, the partnership agreement could
read as follows if you want to keep the historic practice:
Members shall invest a minimum of $300 per calendar year;
payable in amounts of not less than $25.00 not later than
the November meeting. Payments will buy units in the month
received. The minimum amount shall be pro-rated for new
members.
The current language could be interpreted to require a
payment every month, even if the member has paid over $300
so far. It also sounds like your current practice allows
folks to become delinquent in the monthly amount so long as
they make it up by November. If everyone paid their $300 in
November would that be acceptable?
My bottom-line advice: talk with your members to find out
what is acceptable to the group and then amend the language
of your partnership agreement to match. There is no "right"
answer; only what works for your group.
Cheers, Jack
--
Carolyn Sturgis
Irina Clements on
I understand where you are all coming from but a couple of alternate points:
1) if this is a monthly (or 10 or 11 months)meeting club, isn't the idea to contribute monthly as a ongoing interest?
2) If people don't contribute monthly, or at all, they don't have "skin in the game" to focus on ongoing club business
3) certainly it is to be collegial and fun, but it is also a business... does not ongoing monetary contributions keep that a focus?
4) tracking on time or late contributions IS a downer, however, what if you discover the wrong person is in the club? The elements of the partnership agreement concerning contribution are an objective way to measure contribution and provide a means to put them on their way.
5) Monthly contributions and the resulting ebbs and flows of club cash for buys and sells is a ongoing, while the large sums in quarterly or annual member contributions may be difficult to use given market conditions or be a hardship for a member to contribute at one shot.
Best, Irina
On Sep 20, 2021, at 9:44 AM, John Munn via bivio.com <user*223700001@bivio.com> wrote:
The easiest approach would eliminate a monthly minimum, tracking payments and late payment penalties, but credit members' contributions either as they are received or
on a monthly meeting date.
Set an expectation such as $25 monthly, but don't require it, because requiring it requires tracking payments. If someone misses a payment, so what? Bottom line is that their lapsed contribution does not hurt the partnership, it just means their investment is reduced and if/when a lapsed contribution is received, it will purchase units at the current value. This is supposed to be fun. If application of late payments and penalties and excessive administration and rules take the fun out of your club experience, remove them. They add no value, treat people like children and often serve no real purpose.
I agree with Jack - figure out what your club wants to do and adjust your partnership agreement accordingly.
FWIW, my club "expects" a regular contribution of $x each month, but we don't require it. We do not accept advance deposits. If a member contributes more or less, that member gets credit for the number of units that contribution purchased on that date. Yes, this means we may not have a steady influx of cash each month. We have learned to live with that. We have found that with $0 commissions, it really doesn't matter if we have $100 or $1000 (or more) to invest.
Ira Smilovitz
On Sun, Sep 19, 2021 at 5:11 PM John W Ranby Trustee PGM Cariboo Trust via bivio.com <user*15792700001@bivio.com> wrote:
Carolyn:
I would change your question. Ask, how do you want to
handle payments; then change the wording to the partnership
agreement to conform with the practice. Would the club be
happy if every one paid $300 in January so the club had no
new money to invest for the rest of the year? Or is the idea
to have an even in-flow of money over the year to result in
new investment funds throughout the year?
I never liked the idea of advance payments. We have auto pay
so the money flows monthly from the members bank accounts to
the club's brokerage account automatically. If the member
wants to add additional money, he gives me a check. All
money buys units in the month received.
In the case of your club, the partnership agreement could
read as follows if you want to keep the historic practice:
Members shall invest a minimum of $300 per calendar year;
payable in amounts of not less than $25.00 not later than
the November meeting. Payments will buy units in the month
received. The minimum amount shall be pro-rated for new
members.
The current language could be interpreted to require a
payment every month, even if the member has paid over $300
so far. It also sounds like your current practice allows
folks to become delinquent in the monthly amount so long as
they make it up by November. If everyone paid their $300 in
November would that be acceptable?
My bottom-line advice: talk with your members to find out
what is acceptable to the group and then amend the language
of your partnership agreement to match. There is no "right"
answer; only what works for your group.
Cheers, Jack
--
Carolyn Sturgis
ira smilovitz on
Irina,
You have presented a different point of view, but I take exception to 1 1/2 of your points (2 and half of 5).
You question whether members have skin in the game if they don't make regular contributions. I would be (and am) much more concerned about the performance of my accumulated contributions than I am of the amount I may be contributing this month.
Inability to make large quarterly or annual contributions is a non-issue as we don't require them. If someone chooses to make a larger contribution, they obviously have the funds at that time. We have also found a way to deal with large influxes when we don't have something suitable to buy. We park the excess funds in an ETF for a month or two until we determine what to buy.
The availability of commission-free trades has eliminated the need for many of the constraints that used to make sense back when us old-timers began.
I understand where you are all coming from but a couple of alternate points:
1) if this is a monthly (or 10 or 11 months)meeting club, isn't the idea to contribute monthly as a ongoing interest?
2) If people don't contribute monthly, or at all, they don't have "skin in the game" to focus on ongoing club business
3) certainly it is to be collegial and fun, but it is also a business... does not ongoing monetary contributions keep that a focus?
4) tracking on time or late contributions IS a downer, however, what if you discover the wrong person is in the club? The elements of the partnership agreement concerning contribution are an objective way to measure contribution and provide a means to put them on their way.
5) Monthly contributions and the resulting ebbs and flows of club cash for buys and sells is a ongoing, while the large sums in quarterly or annual member contributions may be difficult to use given market conditions or be a hardship for a member to contribute at one shot.
The easiest approach would eliminate a monthly minimum, tracking payments and late payment penalties, but credit members' contributions either as they are received or
on a monthly meeting date.
Set an expectation such as $25 monthly, but don't require it, because requiring it requires tracking payments. If someone misses a payment, so what? Bottom line is that their lapsed contribution does not hurt the partnership, it just means their investment is reduced and if/when a lapsed contribution is received, it will purchase units at the current value. This is supposed to be fun. If application of late payments and penalties and excessive administration and rules take the fun out of your club experience, remove them. They add no value, treat people like children and often serve no real purpose.
I agree with Jack - figure out what your club wants to do and adjust your partnership agreement accordingly.
FWIW, my club "expects" a regular contribution of $x each month, but we don't require it. We do not accept advance deposits. If a member contributes more or less, that member gets credit for the number of units that contribution purchased on that date. Yes, this means we may not have a steady influx of cash each month. We have learned to live with that. We have found that with $0 commissions, it really doesn't matter if we have $100 or $1000 (or more) to invest.
Ira Smilovitz
On Sun, Sep 19, 2021 at 5:11 PM John W Ranby Trustee PGM Cariboo Trust via bivio.com <user*15792700001@bivio.com> wrote:
Carolyn:
I would change your question. Ask, how do you want to
handle payments; then change the wording to the partnership
agreement to conform with the practice. Would the club be
happy if every one paid $300 in January so the club had no
new money to invest for the rest of the year? Or is the idea
to have an even in-flow of money over the year to result in
new investment funds throughout the year?
I never liked the idea of advance payments. We have auto pay
so the money flows monthly from the members bank accounts to
the club's brokerage account automatically. If the member
wants to add additional money, he gives me a check. All
money buys units in the month received.
In the case of your club, the partnership agreement could
read as follows if you want to keep the historic practice:
Members shall invest a minimum of $300 per calendar year;
payable in amounts of not less than $25.00 not later than
the November meeting. Payments will buy units in the month
received. The minimum amount shall be pro-rated for new
members.
The current language could be interpreted to require a
payment every month, even if the member has paid over $300
so far. It also sounds like your current practice allows
folks to become delinquent in the monthly amount so long as
they make it up by November. If everyone paid their $300 in
November would that be acceptable?
My bottom-line advice: talk with your members to find out
what is acceptable to the group and then amend the language
of your partnership agreement to match. There is no "right"
answer; only what works for your group.
Cheers, Jack
--
Carolyn Sturgis
jeff clark on
I always thought Club partnership agreements were cut in stone. I take it from the comments on this thread that a Club can do whatever the visionary(s)/partners of the Club see as the goals and objectives of the Club.
My Club uses a Partnership Agreement (PA) from examples provided by NAIC Investment Club handbook from back in the 90's. Back then, some of the purposes of the Club were investment education, learn about diversifying, learn how to invest regularly, etc. Our PA states $25 monthly and if a partner misses a payment then they will catch up the following month. We know with people's circumstances that's not always possible.
The PA outlines monthly payments and 'back-dues' if you miss payments along with requiring each partner's participation in the offices and functions of the Club.
As partners began to 'get busy' and older and health declined we added a 'hardship clause' to our PA, where a partner could request to be inactive for a period of time. We stated the partner should still pay monthly dues even though they were not being involved with Club events.
As membership declined we began to make allowances for partners missing meetings; not paying dues; requesting a hardship (which may or may not have been justified...however we know once you stop excercising its hard to get started back). Each member used to be required to be on a committee or provide a stock report. If a partner did not have their report or missed meetings we began to be 'understanding of partner's situations'. We have a partner that is more knowledgeable about the specifics of the market than most of the partners. Whereas we used to buy McDougees :-) because we liked the burgers and fries and thought they would make money, now we are more technical with what is the EPS or the PE, or what do the analyst or 'Wallstreet' say? Consequently.... (the President, the Treasurer, and the one most knowledgeable about stocks) or THREE of the 8 or 9 members do 95% of the work. I am trying to get everyone excited again and re-starting committees and having everyone play a role.
I'm just saying when we had guidelines, we still had fun...making money. Some of us need structure. However its the 21st century and everybody does what they want. Nothing is cut in stone.
Am I taking things out of context?
Jeff
On Monday, September 20, 2021, 10:10:11 AM CDT, ira smilovitz via bivio.com <user*2883400001@bivio.com> wrote:
Irina,
You have presented a different point of view, but I take exception to 1 1/2 of your points (2 and half of 5).
You question whether members have skin in the game if they don't make regular contributions. I would be (and am) much more concerned about the performance of my accumulated contributions than I am of the amount I may be contributing this month.
Inability to make large quarterly or annual contributions is a non-issue as we don't require them. If someone chooses to make a larger contribution, they obviously have the funds at that time. We have also found a way to deal with large influxes when we don't have something suitable to buy. We park the excess funds in an ETF for a month or two until we determine what to buy.
The availability of commission-free trades has eliminated the need for many of the constraints that used to make sense back when us old-timers began.
I understand where you are all coming from but a couple of alternate points:
1) if this is a monthly (or 10 or 11 months)meeting club, isn't the idea to contribute monthly as a ongoing interest?
2) If people don't contribute monthly, or at all, they don't have "skin in the game" to focus on ongoing club business
3) certainly it is to be collegial and fun, but it is also a business... does not ongoing monetary contributions keep that a focus?
4) tracking on time or late contributions IS a downer, however, what if you discover the wrong person is in the club? The elements of the partnership agreement concerning contribution are an objective way to measure contribution and provide a means to put them on their way.
5) Monthly contributions and the resulting ebbs and flows of club cash for buys and sells is a ongoing, while the large sums in quarterly or annual member contributions may be difficult to use given market conditions or be a hardship for a member to contribute at one shot.
The easiest approach would eliminate a monthly minimum, tracking payments and late payment penalties, but credit members' contributions either as they are received or
on a monthly meeting date.
Set an expectation such as $25 monthly, but don't require it, because requiring it requires tracking payments. If someone misses a payment, so what? Bottom line is that their lapsed contribution does not hurt the partnership, it just means their investment is reduced and if/when a lapsed contribution is received, it will purchase units at the current value. This is supposed to be fun. If application of late payments and penalties and excessive administration and rules take the fun out of your club experience, remove them. They add no value, treat people like children and often serve no real purpose.
I agree with Jack - figure out what your club wants to do and adjust your partnership agreement accordingly.
FWIW, my club "expects" a regular contribution of $x each month, but we don't require it. We do not accept advance deposits. If a member contributes more or less, that member gets credit for the number of units that contribution purchased on that date. Yes, this means we may not have a steady influx of cash each month. We have learned to live with that. We have found that with $0 commissions, it really doesn't matter if we have $100 or $1000 (or more) to invest.
Ira Smilovitz
On Sun, Sep 19, 2021 at 5:11 PM John W Ranby Trustee PGM Cariboo Trust via bivio.com <user*15792700001@bivio.com> wrote:
Carolyn:
I would change your question. Ask, how do you want to
handle payments; then change the wording to the partnership
agreement to conform with the practice. Would the club be
happy if every one paid $300 in January so the club had no
new money to invest for the rest of the year? Or is the idea
to have an even in-flow of money over the year to result in
new investment funds throughout the year?
I never liked the idea of advance payments. We have auto pay
so the money flows monthly from the members bank accounts to
the club's brokerage account automatically. If the member
wants to add additional money, he gives me a check. All
money buys units in the month received.
In the case of your club, the partnership agreement could
read as follows if you want to keep the historic practice:
Members shall invest a minimum of $300 per calendar year;
payable in amounts of not less than $25.00 not later than
the November meeting. Payments will buy units in the month
received. The minimum amount shall be pro-rated for new
members.
The current language could be interpreted to require a
payment every month, even if the member has paid over $300
so far. It also sounds like your current practice allows
folks to become delinquent in the monthly amount so long as
they make it up by November. If everyone paid their $300 in
November would that be acceptable?
My bottom-line advice: talk with your members to find out
what is acceptable to the group and then amend the language
of your partnership agreement to match. There is no "right"
answer; only what works for your group.
Cheers, Jack
--
Carolyn Sturgis
Peter Dunkelberger on
Our "PA" provides for quarterly dues, payable at the meeting beginning each quarter. It also provides for involuntary removal from the club for not coming to meetings or not paying dues. Collectively, our partners are older than the hills, but everyone participates in an investment committee when it is their turn, and officer positions rotate. We have gotten new, usually younger, members as original members have died, become ill, or simply leave to do something else. I think members will let others do the work if others will do the work. I don't really have advice to give, but clearly you can't keep doing what you are doing and expect things to change.
I always thought Club partnership agreements were cut in stone. I take it from the comments on this thread that a Club can do whatever the visionary(s)/partners of the Club see as the goals and objectives of the Club.
My Club uses a Partnership Agreement (PA) from examples provided by NAIC Investment Club handbook from back in the 90's. Back then, some of the purposes of the Club were investment education, learn about diversifying, learn how to invest regularly, etc. Our PA states $25 monthly and if a partner misses a payment then they will catch up the following month. We know with people's circumstances that's not always possible.
The PA outlines monthly payments and 'back-dues' if you miss payments along with requiring each partner's participation in the offices and functions of the Club.
As partners began to 'get busy' and older and health declined we added a 'hardship clause' to our PA, where a partner could request to be inactive for a period of time. We stated the partner should still pay monthly dues even though they were not being involved with Club events.
As membership declined we began to make allowances for partners missing meetings; not paying dues; requesting a hardship (which may or may not have been justified...however we know once you stop excercising its hard to get started back). Each member used to be required to be on a committee or provide a stock report. If a partner did not have their report or missed meetings we began to be 'understanding of partner's situations'. We have a partner that is more knowledgeable about the specifics of the market than most of the partners. Whereas we used to buy McDougees :-) because we liked the burgers and fries and thought they would make money, now we are more technical with what is the EPS or the PE, or what do the analyst or 'Wallstreet' say? Consequently.... (the President, the Treasurer, and the one most knowledgeable about stocks) or THREE of the 8 or 9 members do 95% of the work. I am trying to get everyone excited again and re-starting committees and having everyone play a role.
I'm just saying when we had guidelines, we still had fun...making money. Some of us need structure. However its the 21st century and everybody does what they want. Nothing is cut in stone.
You have presented a different point of view, but I take exception to 1 1/2 of your points (2 and half of 5).
You question whether members have skin in the game if they don't make regular contributions. I would be (and am) much more concerned about the performance of my accumulated contributions than I am of the amount I may be contributing this month.
Inability to make large quarterly or annual contributions is a non-issue as we don't require them. If someone chooses to make a larger contribution, they obviously have the funds at that time. We have also found a way to deal with large influxes when we don't have something suitable to buy. We park the excess funds in an ETF for a month or two until we determine what to buy.
The availability of commission-free trades has eliminated the need for many of the constraints that used to make sense back when us old-timers began.
I understand where you are all coming from but a couple of alternate points:
1) if this is a monthly (or 10 or 11 months)meeting club, isn't the idea to contribute monthly as a ongoing interest?
2) If people don't contribute monthly, or at all, they don't have "skin in the game" to focus on ongoing club business
3) certainly it is to be collegial and fun, but it is also a business... does not ongoing monetary contributions keep that a focus?
4) tracking on time or late contributions IS a downer, however, what if you discover the wrong person is in the club? The elements of the partnership agreement concerning contribution are an objective way to measure contribution and provide a means to put them on their way.
5) Monthly contributions and the resulting ebbs and flows of club cash for buys and sells is a ongoing, while the large sums in quarterly or annual member contributions may be difficult to use given market conditions or be a hardship for a member to contribute at one shot.
The easiest approach would eliminate a monthly minimum, tracking payments and late payment penalties, but credit members' contributions either as they are received or
on a monthly meeting date.
Set an expectation such as $25 monthly, but don't require it, because requiring it requires tracking payments. If someone misses a payment, so what? Bottom line is that their lapsed contribution does not hurt the partnership, it just means their investment is reduced and if/when a lapsed contribution is received, it will purchase units at the current value. This is supposed to be fun. If application of late payments and penalties and excessive administration and rules take the fun out of your club experience, remove them. They add no value, treat people like children and often serve no real purpose.
I agree with Jack - figure out what your club wants to do and adjust your partnership agreement accordingly.
FWIW, my club "expects" a regular contribution of $x each month, but we don't require it. We do not accept advance deposits. If a member contributes more or less, that member gets credit for the number of units that contribution purchased on that date. Yes, this means we may not have a steady influx of cash each month. We have learned to live with that. We have found that with $0 commissions, it really doesn't matter if we have $100 or $1000 (or more) to invest.
Ira Smilovitz
On Sun, Sep 19, 2021 at 5:11 PM John W Ranby Trustee PGM Cariboo Trust via bivio.com <user*15792700001@bivio.com> wrote:
Carolyn:
I would change your question. Ask, how do you want to
handle payments; then change the wording to the partnership
agreement to conform with the practice. Would the club be
happy if every one paid $300 in January so the club had no
new money to invest for the rest of the year? Or is the idea
to have an even in-flow of money over the year to result in
new investment funds throughout the year?
I never liked the idea of advance payments. We have auto pay
so the money flows monthly from the members bank accounts to
the club's brokerage account automatically. If the member
wants to add additional money, he gives me a check. All
money buys units in the month received.
In the case of your club, the partnership agreement could
read as follows if you want to keep the historic practice:
Members shall invest a minimum of $300 per calendar year;
payable in amounts of not less than $25.00 not later than
the November meeting. Payments will buy units in the month
received. The minimum amount shall be pro-rated for new
members.
The current language could be interpreted to require a
payment every month, even if the member has paid over $300
so far. It also sounds like your current practice allows
folks to become delinquent in the monthly amount so long as
they make it up by November. If everyone paid their $300 in
November would that be acceptable?
My bottom-line advice: talk with your members to find out
what is acceptable to the group and then amend the language
of your partnership agreement to match. There is no "right"
answer; only what works for your group.
Cheers, Jack
--
Carolyn Sturgis
Jack Ranby on
Yes, Jeff, I believe you are taking a few things out of context. My comments about partners deciding how they wanted to handle some accounting functions was not meant to imply that all portions of the suggested partnership agreement were up for modification. Some of the provisions are there to conform with federal securities law; some provisions are there because the founders of NAIC learned they were good practices; and some of the provisions are there because accounting help like bivio and zero trading costs did not exist.
A few examples: the requirements that no limited partners are allowed and all partners must be able to take part in investment decisions are there to avoid violating Federal Securities Commission laws. Having the partnership's purposes to include education and restricting investment to securities so that it is not conducting a business helps avoid some states' regulatory and tax provisions.
Meeting regularly, rotating officer responsibilities, encouraging/requiring all members to follow a stock and make new stock presentations are all good practices and in furtherance of the educational purpose.
So no Jeff, I was not suggesting to throw the baby out with the bath water. But administrative treasurer practices that made sense in the 1950s don't necessarily make sense today. Having our broker pull the monthly capital contribution from members' checking accounts automatically to avoid messing with checks and bank accounts, having the money buy units when received by the broker because bivio can calculate the unit value easily, and sync'ing account transactions between bivio and the broker, all have cut down on the ministerial duties of the treasurer. These are the areas where I believe modifications to fit the individual club's circumstances are appropriate.
Cheers,
Jack
From: club_cafe@bivio.com [mailto:club_cafe@bivio.com] On Behalf Of jeff clark via bivio.com Sent: Wednesday, 22 September, 2021 17:18 To: club_cafe@bivio.com Subject: Re: [club_cafe] Re: Member advance payments
I always thought Club partnership agreements were cut in stone. I take it from the comments on this thread that a Club can do whatever the visionary(s)/partners of the Club see as the goals and objectives of the Club.
My Club uses a Partnership Agreement (PA) from examples provided by NAIC Investment Club handbook from back in the 90's. Back then, some of the purposes of the Club were investment education, learn about diversifying, learn how to invest regularly, etc. Our PA states $25 monthly and if a partner misses a payment then they will catch up the following month. We know with people's circumstances that's not always possible.
The PA outlines monthly payments and 'back-dues' if you miss payments along with requiring each partner's participation in the offices and functions of the Club.
As partners began to 'get busy' and older and health declined we added a 'hardship clause' to our PA, where a partner could request to be inactive for a period of time. We stated the partner should still pay monthly dues even though they were not being involved with Club events.
As membership declined we began to make allowances for partners missing meetings; not paying dues; requesting a hardship (which may or may not have been justified...however we know once you stop excercising its hard to get started back). Each member used to be required to be on a committee or provide a stock report. If a partner did not have their report or missed meetings we began to be 'understanding of partner's situations'. We have a partner that is more knowledgeable about the specifics of the market than most of the partners. Whereas we used to buy McDougees :-) because we liked the burgers and fries and thought they would make money, now we are more technical with what is the EPS or the PE, or what do the analyst or 'Wallstreet' say? Consequently.... (the President, the Treasurer, and the one most knowledgeable about stocks) or THREE of the 8 or 9 members do 95% of the work. I am trying to get everyone excited again and re-starting committees and having everyone play a role.
I'm just saying when we had guidelines, we still had fun...making money. Some of us need structure. However its the 21st century and everybody does what they want. Nothing is cut in stone.
Am I taking things out of context?
Jeff
polymerguy on
We use a model similar to Peter's: club shares are allocated and dues are charged each month. Members' dues range from $25 - $200 per month but are largely fixed for the year. We run a suspense account for dues in advance or for dues owed if not paid in a month. We also have a clause in our ByLaws for expulsion of passive members and have used it. That model is not going to work for a lot of clubs out there, but we were founded with members from a large manufacturing company, so the "process" model works well for us. We don't have any trouble with late dues or attendance, not out of coercion, but everyone knows what the expectations are when they join. And like Jeff says: we still have a lot of fun! - we found that a structured approach fit us well and has for 25 years.
From: club_cafe@bivio.com <club_cafe@bivio.com> On Behalf Of Peter Dunkelberger via bivio.com Sent: Wednesday, September 22, 2021 8:48 PM To: club_cafe@bivio.com Subject: Re: [club_cafe] Re: Member advance payments
Our "PA" provides for quarterly dues, payable at the meeting beginning each quarter. It also provides for involuntary removal from the club for not coming to meetings or not paying dues. Collectively, our partners are older than the hills, but everyone participates in an investment committee when it is their turn, and officer positions rotate. We have gotten new, usually younger, members as original members have died, become ill, or simply leave to do something else. I think members will let others do the work if others will do the work. I don't really have advice to give, but clearly you can't keep doing what you are doing and expect things to change.
I always thought Club partnership agreements were cut in stone. I take it from the comments on this thread that a Club can do whatever the visionary(s)/partners of the Club see as the goals and objectives of the Club.
My Club uses a Partnership Agreement (PA) from examples provided by NAIC Investment Club handbook from back in the 90's. Back then, some of the purposes of the Club were investment education, learn about diversifying, learn how to invest regularly, etc. Our PA states $25 monthly and if a partner misses a payment then they will catch up the following month. We know with people's circumstances that's not always possible.
The PA outlines monthly payments and 'back-dues' if you miss payments along with requiring each partner's participation in the offices and functions of the Club.
As partners began to 'get busy' and older and health declined we added a 'hardship clause' to our PA, where a partner could request to be inactive for a period of time. We stated the partner should still pay monthly dues even though they were not being involved with Club events.
As membership declined we began to make allowances for partners missing meetings; not paying dues; requesting a hardship (which may or may not have been justified...however we know once you stop excercising its hard to get started back). Each member used to be required to be on a committee or provide a stock report. If a partner did not have their report or missed meetings we began to be 'understanding of partner's situations'. We have a partner that is more knowledgeable about the specifics of the market than most of the partners. Whereas we used to buy McDougees :-) because we liked the burgers and fries and thought they would make money, now we are more technical with what is the EPS or the PE, or what do the analyst or 'Wallstreet' say? Consequently.... (the President, the Treasurer, and the one most knowledgeable about stocks) or THREE of the 8 or 9 members do 95% of the work. I am trying to get everyone excited again and re-starting committees and having everyone play a role.
I'm just saying when we had guidelines, we still had fun...making money. Some of us need structure. However its the 21st century and everybody does what they want. Nothing is cut in stone.
You have presented a different point of view, but I take exception to 1 1/2 of your points (2 and half of 5).
You question whether members have skin in the game if they don't make regular contributions. I would be (and am) much more concerned about the performance of my accumulated contributions than I am of the amount I may be contributing this month.
Inability to make large quarterly or annual contributions is a non-issue as we don't require them. If someone chooses to make a larger contribution, they obviously have the funds at that time. We have also found a way to deal with large influxes when we don't have something suitable to buy. We park the excess funds in an ETF for a month or two until we determine what to buy.
The availability of commission-free trades has eliminated the need for many of the constraints that used to make sense back when us old-timers began.
I understand where you are all coming from but a couple of alternate points:
1) if this is a monthly (or 10 or 11 months)meeting club, isn't the idea to contribute monthly as a ongoing interest?
2) If people don't contribute monthly, or at all, they don't have "skin in the game" to focus on ongoing club business
3) certainly it is to be collegial and fun, but it is also a business... does not ongoing monetary contributions keep that a focus?
4) tracking on time or late contributions IS a downer, however, what if you discover the wrong person is in the club? The elements of the partnership agreement concerning contribution are an objective way to measure contribution and provide a means to put them on their way.
5) Monthly contributions and the resulting ebbs and flows of club cash for buys and sells is a ongoing, while the large sums in quarterly or annual member contributions may be difficult to use given market conditions or be a hardship for a member to contribute at one shot.
The easiest approach would eliminate a monthly minimum, tracking payments and late payment penalties, but credit members' contributions either as they are received or on a monthly meeting date.
Set an expectation such as $25 monthly, but don't require it, because requiring it requires tracking payments. If someone misses a payment, so what? Bottom line is that their lapsed contribution does not hurt the partnership, it just means their investment is reduced and if/when a lapsed contribution is received, it will purchase units at the current value. This is supposed to be fun. If application of late payments and penalties and excessive administration and rules take the fun out of your club experience, remove them. They add no value, treat people like children and often serve no real purpose.
I agree with Jack - figure out what your club wants to do and adjust your partnership agreement accordingly.
FWIW, my club "expects" a regular contribution of $x each month, but we don't require it. We do not accept advance deposits. If a member contributes more or less, that member gets credit for the number of units that contribution purchased on that date. Yes, this means we may not have a steady influx of cash each month. We have learned to live with that. We have found that with $0 commissions, it really doesn't matter if we have $100 or $1000 (or more) to invest.
Ira Smilovitz
On Sun, Sep 19, 2021 at 5:11 PM John W Ranby Trustee PGM Cariboo Trust via bivio.com <user*15792700001@bivio.com> wrote:
Carolyn:
I would change your question. Ask, how do you want to handle payments; then change the wording to the partnership agreement to conform with the practice. Would the club be happy if every one paid $300 in January so the club had no new money to invest for the rest of the year? Or is the idea to have an even in-flow of money over the year to result in new investment funds throughout the year?
I never liked the idea of advance payments. We have auto pay so the money flows monthly from the members bank accounts to the club's brokerage account automatically. If the member wants to add additional money, he gives me a check. All money buys units in the month received.
In the case of your club, the partnership agreement could read as follows if you want to keep the historic practice:
Members shall invest a minimum of $300 per calendar year; payable in amounts of not less than $25.00 not later than the November meeting. Payments will buy units in the month received. The minimum amount shall be pro-rated for new members.
The current language could be interpreted to require a payment every month, even if the member has paid over $300 so far. It also sounds like your current practice allows folks to become delinquent in the monthly amount so long as they make it up by November. If everyone paid their $300 in November would that be acceptable?
My bottom-line advice: talk with your members to find out what is acceptable to the group and then amend the language of your partnership agreement to match. There is no "right" answer; only what works for your group. Cheers, Jack
--
Carolyn Sturgis
jeff clark on
Jack, I got it!
You are absolutely correct especially about the technological changes.
Best wishes to you and your Club.
Jeff
On Thursday, September 23, 2021, 09:42:54 AM CDT, Jack Ranby via bivio.com <user*15792700001@bivio.com> wrote:
Yes, Jeff, I believe you are taking a few things out of context. My comments about partners deciding how they wanted to handle some accounting functions was not meant to imply that all portions of the suggested partnership agreement were up for modification. Some of the provisions are there to conform with federal securities law; some provisions are there because the founders of NAIC learned they were good practices; and some of the provisions are there because accounting help like bivio and zero trading costs did not exist.
A few examples: the requirements that no limited partners are allowed and all partners must be able to take part in investment decisions are there to avoid violating Federal Securities Commission laws. Having the partnership's purposes to include education and restricting investment to securities so that it is not conducting a business helps avoid some states' regulatory and tax provisions.
Meeting regularly, rotating officer responsibilities, encouraging/requiring all members to follow a stock and make new stock presentations are all good practices and in furtherance of the educational purpose.
So no Jeff, I was not suggesting to throw the baby out with the bath water. But administrative treasurer practices that made sense in the 1950s don't necessarily make sense today. Having our broker pull the monthly capital contribution from members' checking accounts automatically to avoid messing with checks and bank accounts, having the money buy units when received by the broker because bivio can calculate the unit value easily, and sync'ing account transactions between bivio and the broker, all have cut down on the ministerial duties of the treasurer. These are the areas where I believe modifications to fit the individual club's circumstances are appropriate.
Cheers,
Jack
From: club_cafe@bivio.com [mailto:club_cafe@bivio.com] On Behalf Of jeff clark via bivio.com Sent: Wednesday, 22 September, 2021 17:18 To: club_cafe@bivio.com Subject: Re: [club_cafe] Re: Member advance payments
I always thought Club partnership agreements were cut in stone. I take it from the comments on this thread that a Club can do whatever the visionary(s)/partners of the Club see as the goals and objectives of the Club.
My Club uses a Partnership Agreement (PA) from examples provided by NAIC Investment Club handbook from back in the 90's. Back then, some of the purposes of the Club were investment education, learn about diversifying, learn how to invest regularly, etc. Our PA states $25 monthly and if a partner misses a payment then they will catch up the following month. We know with people's circumstances that's not always possible.
The PA outlines monthly payments and 'back-dues' if you miss payments along with requiring each partner's participation in the offices and functions of the Club.
As partners began to 'get busy' and older and health declined we added a 'hardship clause' to our PA, where a partner could request to be inactive for a period of time. We stated the partner should still pay monthly dues even though they were not being involved with Club events.
As membership declined we began to make allowances for partners missing meetings; not paying dues; requesting a hardship (which may or may not have been justified...however we know once you stop excercising its hard to get started back). Each member used to be required to be on a committee or provide a stock report. If a partner did not have their report or missed meetings we began to be 'understanding of partner's situations'. We have a partner that is more knowledgeable about the specifics of the market than most of the partners. Whereas we used to buy McDougees :-) because we liked the burgers and fries and thought they would make money, now we are more technical with what is the EPS or the PE, or what do the analyst or 'Wallstreet' say? Consequently.... (the President, the Treasurer, and the one most knowledgeable about stocks) or THREE of the 8 or 9 members do 95% of the work. I am trying to get everyone excited again and re-starting committees and having everyone play a role.
I'm just saying when we had guidelines, we still had fun...making money. Some of us need structure. However its the 21st century and everybody does what they want. Nothing is cut in stone.