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Partial payout to club member
Hello,
How does your club handle partial/full payouts of members?
I am in an investment club that has been going since 2000.
We feel our by-laws are well written but we need some help
addressing a partial or full withdrawal of funds from the
club. Currently the club has 3 months to payout the member
who requested the funds. The issue we have is what happens
if there is a big market swing over these 3 months and their
shares are worth much more or less than when they requested
the funds.

Please share any insight on how your club handles
withdrawals

Thank you!
Their request to withdraw is presented to the club at the first meeting after they notify the treasurer and the club decides which stocks/cash to transfer to them. Two days before the following meeting the transaction is completed. So in that month the value can go up or down. So there is a month of time when the value changes. The member withdrawing takes that risk. Remember that the club doesn't lose out or gain anything because it is done on a percentage basis.

John Rice
ABODI Investment Club

On Tue, May 10, 2022 at 10:56 AM Todd Beckner via bivio.com <user*13112000001@bivio.com> wrote:
Hello,
How does your club handle partial/full payouts of members?
I am in an investment club that has been going since 2000.
We feel our by-laws are well written but we need some help
addressing a partial or full withdrawal of funds from the
club. Currently the club has 3 months to payout the member
who requested the funds. The issue we have is what happens
if there is a big market swing over these 3 months and their
shares are worth much more or less than when they requested
the funds.

Please share any insight on how your club handles
withdrawals

Thank you!
In our club the valuation is done on the last day of the month preceding notice of withdrawal. That way they know what they will receive. We only do cash payout, no stock distribution. We pay out 15 days after the meeting when members are notified of the member withdrawal. This allows the remaining members to decide how to fund the payout. Sometimes we sell some stock and sometimes we do a margin loan. We have used this method for 58 years.

Sent from my iPhone

> On May 10, 2022, at 1:56 PM, Todd Beckner via bivio.com <user*13112000001@bivio.com> wrote:
>
> Hello,
> How does your club handle partial/full payouts of members?
> I am in an investment club that has been going since 2000.
> We feel our by-laws are well written but we need some help
> addressing a partial or full withdrawal of funds from the
> club. Currently the club has 3 months to payout the member
> who requested the funds. The issue we have is what happens
> if there is a big market swing over these 3 months and their
> shares are worth much more or less than when they requested
> the funds.
>
> Please share any insight on how your club handles
> withdrawals
>
> Thank you!
Randy,

Your procedure is very dangerous. If the market has a sudden drop between the end of the month valuation date and the date the club is notified, you could find that you have inssufficient funds to make the payout. (Irt won't happen with a single withdrawal, but what if multiple members decide at once?) You are allowing your members to time the market.

Ira Smilovitz

On Tue, May 10, 2022 at 3:07 PM Randy Purvis via bivio.com <user*37247600001@bivio.com> wrote:
In our club the valuation is done on the last day of the month preceding notice of withdrawal. That way they know what they will receive. We only do cash payout, no stock distribution. We pay out 15 days after the meeting when members are notified of the member withdrawal. This allows the remaining members to decide how to fund the payout. Sometimes we sell some stock and sometimes we do a margin loan. We have used this method for 58 years.

Sent from my iPhone

> On May 10, 2022, at 1:56 PM, Todd Beckner via bivio.com <user*13112000001@bivio.com> wrote:
>
> Hello,
> How does your club handle partial/full payouts of members?
> I am in an investment club that has been going since 2000.
> We feel our by-laws are well written but we need some help
> addressing a partial or full withdrawal of funds from the
> club. Currently the club has 3 months to payout the member
> who requested the funds. The issue we have is what happens
> if there is a big market swing over these 3 months and their
> shares are worth much more or less than when they requested
> the funds.
>
> Please share any insight on how your club handles
> withdrawals
>
> Thank you!
Thanks for your insight. We agree and that is why we are
trying to make some changes. We are looking for best
practices that are fair to both the member(s) that is
withdrawing and the club.
That risk goes both ways. With 20 members and 58 years of experience we have never been burned yet. In today's market we might take a hit however!

Sent from my iPhone

On May 10, 2022, at 3:25 PM, ira smilovitz via bivio.com <user*2883400001@bivio.com> wrote:


Randy,

Your procedure is very dangerous. If the market has a sudden drop between the end of the month valuation date and the date the club is notified, you could find that you have inssufficient funds to make the payout. (Irt won't happen with a single withdrawal, but what if multiple members decide at once?) You are allowing your members to time the market.

Ira Smilovitz

On Tue, May 10, 2022 at 3:07 PM Randy Purvis via bivio.com <user*37247600001@bivio.com> wrote:
In our club the valuation is done on the last day of the month preceding notice of withdrawal. That way they know what they will receive. We only do cash payout, no stock distribution. We pay out 15 days after the meeting when members are notified of the member withdrawal. This allows the remaining members to decide how to fund the payout. Sometimes we sell some stock and sometimes we do a margin loan. We have used this method for 58 years.

Sent from my iPhone

> On May 10, 2022, at 1:56 PM, Todd Beckner via bivio.com <user*13112000001@bivio.com> wrote:
>
> Hello,
> How does your club handle partial/full payouts of members?
> I am in an investment club that has been going since 2000.
> We feel our by-laws are well written but we need some help
> addressing a partial or full withdrawal of funds from the
> club.  Currently the club has 3 months to payout the member
> who requested the funds.  The issue we have is what happens
> if there is a big market swing over these 3 months and their
> shares are worth much more or less than when they requested
> the funds.
>
> Please share any insight on how your club handles
> withdrawals
>
> Thank you!

Our valuation date is the next standard valuation date (end of the month) after receiving an intent to withdraw.  That mostly eliminates timing the market.  We also stipulation the membership may vote to change the valuation date:

The value of the Partner's account will be determined in a special valuation on a date of withdrawal as determined by the President and with the approval of two-thirds of all the Partners. Such a valuation is reserved for hardship or other special cases where immediate access to the Partner's assets is appropriate. Should approval by two-thirds majority fail, valuation by method "a" (Standard Valuation) will be used.

Jimmy

James P. Dickerson

Office: +1.423.229.1935 | Mobile: +1.423.367.9693 |   www.eastman.com

From: club_cafe@bivio.com <club_cafe@bivio.com> On Behalf Of Randy Purvis via bivio.com
Sent: Tuesday, May 10, 2022 3:36 PM
To: club_cafe@bivio.com
Subject: [EXTERNAL] Re: [club_cafe] Partial payout to club member

CAUTION: External Email

That risk goes both ways. With 20 members and 58 years of experience we have never been burned yet. In today's market we might take a hit however!

Sent from my iPhone



On May 10, 2022, at 3:25 PM, ira smilovitz via bivio.com <user*2883400001@bivio.com> wrote:



Randy,

Your procedure is very dangerous. If the market has a sudden drop between the end of the month valuation date and the date the club is notified, you could find that you have inssufficient funds to make the payout. (Irt won't happen with a single withdrawal, but what if multiple members decide at once?) You are allowing your members to time the market.

Ira Smilovitz

On Tue, May 10, 2022 at 3:07 PM Randy Purvis via bivio.com <user*37247600001@bivio.com> wrote:

In our club the valuation is done on the last day of the month preceding notice of withdrawal. That way they know what they will receive. We only do cash payout, no stock distribution. We pay out 15 days after the meeting when members are notified of the member withdrawal. This allows the remaining members to decide how to fund the payout. Sometimes we sell some stock and sometimes we do a margin loan. We have used this method for 58 years.

Sent from my iPhone

> On May 10, 2022, at 1:56 PM, Todd Beckner via bivio.com <user*13112000001@bivio.com> wrote:
>
> Hello,
> How does your club handle partial/full payouts of members?
> I am in an investment club that has been going since 2000.
> We feel our by-laws are well written but we need some help
> addressing a partial or full withdrawal of funds from the
> club.  Currently the club has 3 months to payout the member
> who requested the funds.  The issue we have is what happens
> if there is a big market swing over these 3 months and their
> shares are worth much more or less than when they requested
> the funds.
>
> Please share any insight on how your club handles
> withdrawals
>
> Thank you!