In a 2010 New York Times story about Tiger 21, one of our members noted, “We all learn from each other; that’s the magic of the place.”

The source of much of that magic is the Portfolio Defense (PD), our signature feature. Just about every monthly meeting includes a PD, as we call the grilling that each of us must undergo every year on the critical and often emotional choices we have made in our financial lives. Members often prepare for days or weeks in advance, and the actual defense usually lasts for 90 minutes, no holds barred, and covers every stock, bond, private investment, fund position, and piece of real estate we own—and in some cases, our philanthropic interests. As important as the numbers are in isolation, they come to life when members share their answers to a detailed set of questions about their goals, personal life, family, and their anxieties about protecting their wealth and transferring it to children and charities. More broadly, the questions force our members to explore the broader meaning of wealth in their lives, and in what ways it can be used to lever philanthropic, political, or family goals and interests.

I have been doing an annual Portfolio Defense for 18 years. Yet I still enter the room with a combination of trepidation and curiosity regarding what the response to the latest report on the State of Sonnenfeldt will be. Frankly, not everyone can handle such naked exposure. “I’ve seen people quit the group the week before their first Portfolio Defense, even the night before,” a longtime member reports. “They just couldn’t face the scrutiny.”

That’s their loss. The truth can hurt, but it also helps. I remember one PD in the late 1990s in which a member had allocated 40 percent of his portfolio to biotech stocks. None of us in that room pretended to be experts in biotech, but we knew from experience that falling in love with one sector of the economy as a passive investor was asking for trouble. At the end of the PD, the message could not have been clearer: reduce your exposure to biotech.

But he procrastinated. Although he had made his money in an unrelated field, he was now convinced that biotech was the future. It wasn’t until a couple weeks before his next PD, the following year, that he began cutting back on his biotech shares. He later confessed that he didn’t want to show up having done nothing.

Another memorable PD a decade ago revealed that the member had 75 percent of his assets invested in just one fund. Though everyone agreed that its returns were excellent, the consensus was that putting more than half of his assets in a single fund was way too risky. (Personally, having anything remotely close to half of that 75 percent in a single allocation would scare the bejesus out of me.) The member conceded the risks but insisted that the returns were simply too rich to pass up. He quit the group shortly thereafter. He didn’t feel the advice his group had provided him was wise or useful. He had no interest in pulling his money out of a fund run by one of the top traders in the United States—Bernie Madoff.

Although Bernie Madoff was a well-known figure in New York investment circles, none of us knew at the time that he was operating the biggest Ponzi scheme in history, which, when it collapsed in 2008, destroyed billions of dollars of investors’ assets. That ex-member’s losses were grievous, but there were even more troubling stories of people so enamored with Madoff that they had actually mortgaged their apartments and invested the proceeds, effectively having put over 100 percent of their net worth at risk.

What that member didn’t seem to realize was that, in Tiger 21, he had a “personal board of directors” on his side, as Charlie Garcia, the chair of multiple groups in South Florida, has dubbed the benefit of membership.¹ “I’m chairing the board,” he explains. “There are 14 other members in the room who are very successful in different industries—from lawyers and bankers to hedge fund and private entrepreneurs—who also bring their investment, business, personal, and family challenges to the table.”

One of the things that every member learns quickly is that no matter how smart or rich we might be, we all have our blind spots, If you don’t know what they are, someone in your group will likely point them out to you. We try to soften the blows by encouraging a care-frontational approach. Still, even the kindest criticism from a world-class investor can make a world-class entrepreneur feel like a C student or worse. Part of my own anxiety about PDs is that, as the organization’s founder, I feel like I should be a better investor than I am.

As I prepared for my PD at the end of 2013, however, I felt I was on the right track. The equity markets were ascending again, and I had followed my group’s advice by hiring a full-time investment manager to join my team to help me manage my portfolio. I had also initiated a disciplined approach that the younger me would have hardly recognized. I’d jettisoned small holdings and sold off a house I’d been maintaining for sentimental reasons. I had devoted 20 percent of my time, with discipline, to managing my portfolio, brought on a full-time professional to help me professionalize our shop, and I was proud of the progress I’d made. I was expecting my fellow members to shower me with praise. The opposite happened.

Once all my non–real estate holdings were added up, the total value of my investment portfolio had risen by a mere 6.6 percent in a bullish year when the S&P 500 Index was up 40 percent. A member who heads a wealth management firm was horrified that 20 percent of my portfolio was in cash. My explanation: Even though my days of keeping cash on hand to finance my next big deal were over, I also looked at cash as a hedge against an unexpected disaster—a black-swan event like the 9/11 attacks, market crashes, or environmental catastrophes. I’ve never forgotten how relieved I was during the stock market crash of October 1987 to still be sitting on the proceeds of the sale of my first company in cash while everyone around me was in a panic.

One financier in the group zeroed in on the long equities in my portfolio, which had risen by only 1 percent. “If you had your money in muni bonds, tax-free, you’d get a better return sleeping,” he advised. “Based on your performance, I’d fire the manager, which would be you.” He was right. I don’t pick individual stocks anymore.

Then one of my oldest friends in the group pointed out that the financial successes I had cited in my report were minor. “You’ve gone from a D to a C minus,” he said. “If you’re spending 20 percent of your time managing this money, you’ve really got a problem. This is not the right pursuit for you.” Another member, who had been vice chairman of a major Wall Street investment firm, said he thought I should keep whittling down the positions in the portfolio, from 77 to 40, maybe even 30. “The smallest position should be worth 2 percent of the total; the largest around 8 percent.”

After 90 minutes, I had heard a lot of expert opinions and investment suggestions. One of my most useful takeaways from that PD was a bit of self-knowledge that has made me a more mature investor today. I’ve finally accepted that I am not likely to ever measure up to the world-class investors in our organization. My solution has been to negotiate a compromise between being an active entrepreneur, always on the lookout for great opportunities for exciting returns, and being a passive investor intent on protecting his wealth. Both sides seem content, at least for now.

Most comforting of all is that I have such a large, wise personal board of directors on hand—fellow members whose only interest in my portfolio is my well-being. Whenever a major decision emerges in my life about business, investments, philanthropy, and even family concerns, I have trained myself to ask, “Who in Tiger 21 can give me the best counsel on this?”

What are your blind spots? If you don’t have an answer (or believe you have none), you need to assemble your own personal board of directors to help you evaluate how well you’re managing your business, your money, and your personal life. As Charlie Garcia notes, “In order for you to live an authentic life or be an authentic leader, you need to surround yourself with people who will give you their honest feedback.”

One note: I can’t count the number of times a friend or an acquaintance has come to me for advice on a small business they own or are contemplating acquiring or creating. Inevitably I ask, “Do you have a board of directors?” Shockingly (to me anyway), most respond that they hadn’t even thought of that. In almost every case where I was able to convince the person to recruit and empower a board, it has been an unqualified success. Everyone has blind spots. Having decent, honorable, committed, and wise advisors is one of the greatest tools any entrepreneur can have.