Your retirement plan’s Investment Committee is most likely composed of individuals with extremely busy schedules and a small amount of time dedicated to discussions surrounding your plans investments. So how do you make the most of their limited availability? We’ve put together a list of some tips, tricks, and best practices to make sure your Investment Committee meetings run efficiently and effectively.
Typical committee sizes range between 3 and 9 members, but there is a correlation between the size of the assets and the number of committee members. Larger retirement plans or those with multiple plans generally have more members.
Committee members with diverse backgrounds can make for more interesting and productive meetings, and many benefits can be derived from capturing different opinions and skill sets.
While frequent member turnover is undesirable, having no new members with fresh ideas and thinking isn’t ideal either. Terms should be staggered so as not to lose important history and the reasonableness of term limits should be reviewed with a possible limit of 5 years. When new members are brought in, they should receive training and understand their responsibilities.
A Committee Charter should formalize the decisions above.
There is a correlation between the size of assets and the frequency with which committees meet. Generally with asset sizes over $50 million, committees meet no less than semiannually and often meet quarterly.
An agenda and materials should be distributed in advance of the meeting. Identify decision items and any supporting documentation that is needed in making those decisions. It’s suggested to identify how much time will be spent on each item and who is responsible for presenting. This helps the Committees stay on track.
Minutes serve to document the Committee’s process, and should include the group’s discussion, questions raised, considerations reviewed, final decisions, and the rationale for those decisions. Keep copies of the minutes along with all the meeting materials and develop those minutes shortly after the meeting while memories are fresh.
It’s a good idea to set meeting dates well in advance, such as the beginning of the year. Calendars tend to fill up quickly and having your meeting on the calendar will be one less thing to think about.
Committee’s function best when the members are engaged. Members should be reviewing the materials in advance and should come to meetings prepared with questions and opinions. They should realize their personal views on investing may not be appropriate for the assets the Committee has responsibility for.
The Committee Chair is responsible for maintaining focus and keeping everyone on track. The Chair needs to make sure there is clarity. Everyone leaving the meeting should know the decisions that were made, the next steps that need to occur by whom and by when.
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All investment advisory services are provided through Conrad Siegel Investment Advisors, Inc. (“CSIA”), a fee-only investment adviser registered with the U.S. Securities and Exchange Commission. This article contains general information about recent US tax reform and should not be relied upon as the basis for any investment, tax or legal decision. Please consult with your financial or accounting professional.