Jarek Dominiak is forming investment clubs to teach financial management skills to people from all walks of life, and particularly to people living in rural areas. These clubs build trust among participants and encourage hands-on learning through collective investing.
The New Idea
To steer people through the economic transition underway in Poland and to give them the information and tools they need to support a market economy, Jarek teaches people about financial systems and management. Based in Wroclaw, his investors' association stimulates the growth of small investors' clubs throughout Poland that bring together people who want to know more about the new economy and their role in it. Initially, participants contribute a small sum of money to the club pool. Then, by joining their contributions and working together to pursue smart investment opportunities, they gain confidence through hands-on techniques and learn concepts that apply to the national economy as well as their individual households. And by making joint investment decisions, club members learn group responsibility and community trust is strengthened. In seven years, Jarek hopes to see over one thousand investment clubs, and twenty thousand participants, operating throughout the country.
In Poland and throughout much of central Europe, the economic transition of the past decade has been challenging, in part because few people grew up managing personal funds in the way that they need to now. As new regulations, institutions, and terminology emerged to support a market economy, governments failed to communicate these changes and teach its citizens how to live in the changed economy. In Poland, thousands received bonds and company stock through privatization programs that encouraged companies to compensate downsized factory workers. These initiatives did not come with proper training, however, leaving the workers with papers and certificates they could not translate into profits. So what was a hopeful shift in the early nineties to a free market economy has resulted in confusion and dashed hopes, and many have seen a dip in their standard of living. What's more, Poland has become a breeding ground for modern-day robber barons, who buy shares from uneducated people at very low prices and glean profits that could be a great support to the modest budgets of regular Polish citizens. Skepticism of the new system, which arose from Communist times, prevails over education and risk-taking; of those in a position to invest, a mere 10 percent do so.
In response to this lack of knowledge among average citizens, Jarek founded the Individual Investors' Association in 1999 in Wroclaw. The Association has created investors' clubs to educate people from urban and rural backgrounds who share an interest in understanding the new economy. Participants gather in small clubs of between five and thirty people each and make joint decisions about investing. Each contributes a small sum–30-40 zloty, or approximately $7-10–each month to the investment pool. This sum of money isn't worth investing from a profit-seeking perspective, but it is enough to serve its intended purpose here: to illustrate very tangibly how the stock market works, and to teach smart investing to citizens.
To support the establishment of clubs all over Poland, Jarek gained support from the Ministry of Finance, brokerage offices, Polish Stock Exchange, National Deposit for Funds, and others. The next step was to secure the funds needed for spreading the idea and promoting the program nationwide. In the beginning, he secured financial support from ten Polish companies. To reach the public, as well as potential donors, he launched a promotional campaign in Poland. In less than a month, he visited eleven cities to present the investors' club idea to more than five hundred people. Interest exceeded his expectation, demonstrating a tremendous need for this type of education.
To coordinate the program, Jarek has set up branches of the association throughout Poland. The first tour in Polish cities resulted in new branches in Katowice, Lodz, Poznan, Sopot, Bia³ystok, Lublin, Czêstochowa, Bydgoszcz, and Krakow. The groups draw their strength from the diversity of professional backgrounds and experiences of the group. Students, university professors, and retired school teachers offered to organize branches in their towns; in addition to volunteering their time, some donated office space as well. With the help of stock brokers, Jarek will provide basic training for club participants, helping them to learn the ropes and guiding them through the start-up phase. Jarek and his team are providing all necessary documents and materials to minimize the bureaucratic formalities in establishing clubs. The documents include sample agendas and proposed topics for the meetings.
For remote areas of the countryside, the clubs help to bring neighbors together and establish trust. The actions of the club eventually spill over into other areas of community action as well. For this reason, Jarek sees his outreach efforts to rural areas as extremely important. Jarek believes that in five to seven years there will be more than one thousand clubs operating in Poland, with more than twenty thousand participants and fifty branches. These branches will offer educational support programs, organize training sessions and meetings, and distribute free educational materials. As one measure of success, Jarek expects to see the percentage of Polish citizens who invest in the stock market to rise from 5 to 15 percent in the next few years. Jarek is remarkably successful with garnering media support for his activities. To promote his idea and spread the program, he has pulled together journalists at local and national newspapers.
Throughout his life, Jarek has demonstrated a strong will to help other people, a will that he says was passed on to him from his parents. In high school, he participated in programs for helping kids in need. During his activities with the international student organization AISEC, Jarek was responsible for organizing student conferences on stock exchange issues. The institutions with which he collaborated most closely–Polish Stock Exchange, National Deposit of Worth Documents–appreciated his work and this experience allowed him to establish contacts that have been, and continue to be, critical. In 2000, Jarek graduated from the University of Economics in Wroclaw and completely devoted himself to getting his association off the ground.