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Tips to Heighten Investment Committee Effectiveness

Practice Management

A key factor in fulfilling the mission of a retirement plan is for the funds in the plan to be invested wisely. An investment committee can be helpful in making sure that happens; an industry insider offers tips on making that committee effective. 

In “How To Make Your Investment Committee More Effective,” Fiducient Advisors CEO Robert DiMeo makes some suggestions regarding best practices concerning investment committees. 

Assembling the Committee. DiMeo argues that there is more to forming a successful investment committee than recruiting talented people—it also takes having “the right mix of players.” He suggests, for instance, that members could be drawn from the finance, human resources and legal departments. 

Short and Long-term Perspectives. It’s not hard for an investment committee to pay close attention to short-term performance and investments; after all, there is a fiduciary duty to do so. But a committee also needs to consider matters that will make the plan better, DiMeo suggests, such as investment menu design and administrative fees.

Hold Effective Meetings. DiMeo suggests steps to make sure that investment committee meetings are effective. For instance, facilitate a call between the plan sponsor and the investment team before a meeting to tighten the meeting agenda; make sure committee members attend the meeting and are engaged; schedule meetings a year in advance; send meeting materials in advance of a meeting; and maintain meeting minutes.  

Learn and Debate. DiMeo stresses the importance of learning, suggesting that committee members stay informed regarding trends relevant to the plan and what other plan sponsors are doing. He adds that good committees also debate matters relevant to the plan and its investments. 

The Big Picture. Where investment committee members come from, DiMeo posits, is not the only important factor: he also argues that it is beneficial to have investment committee members who consider the greater good, collaborate and are not motivated by ego. He argues that membership on an investment committee is more than fulfilling responsibilities—it also is an opportunity to enhance the plan for the good of participants and the organization.