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Committee Best Practices: Investments

Practice Management

Editor’s Note: This is the second in a two-part series about creating and managing retirement plan committees. Part 1 is here.

Fiduciary duties and fulfilling them includes managing the investment of plan assets — and one of the tools for accomplishing that is the investment committee.
Investment committees are useful not only in meeting the letter of ERISA, but also its spirit — serving the plan, as well as the plan participants and their dependents and beneficiaries. ConradSiegel, in “Investment Committee Basics,” offers practical tips and ideas for how best such a committee can fulfill its responsibilities.

Investment committees usually have three to nine members, the report says, but the number of members corresponds to the size of the plan’s assets. It suggests that committee members have diverse backgrounds, since that will allow the benefit of different opinions and skills. The report also suggests that members’ terms be staggered and not all concurrent, so as to make it possible for there to be some members with knowledge of the committee’s work and at the same time an infusion of fresh ideas and thinking.

The report has a variety of suggestions concerning investment committee meetings:

  • Meeting dates should be set well in advance.
  • The frequency of committee meetings correlates to the size of assets.
  • Distribute an agenda and materials before the meeting; identify decisions to be made, supporting documentation that will be needed, the amount of time that will be spent on agenda items and who will be making presentations.
  • Minutes should be taken at meetings in order to document the committee processes, discussions, the questions raised, considerations reviewed, final decisions, and the rationale for decisions.

The report also suggests that a committee charter be formulated and adopted to formalize the committee’s decisions.