Characteristics of Highly Effective Investment Committees
“A meeting is an event at which the minutes are kept and the hours are lost.” – Unknown

This is a popular quote and one that generates a smile to anyone who has participated in an ineffective meeting or has been on an ineffective committee. The key question becomes, What are some of the characteristics of an effective meeting or committee? In our decades of experience with a variety of Investment Committees, Beacon Pointe’s Institutional Consultants have found that the most successful committees typically have the following traits.

Meetings are Well Structured and Planned

“Plan for the meeting or plan for disaster” is another well know expression. What are some of the planning criteria required for a successful meeting? Beacon Pointe has noticed that it is helpful to have an agenda that is clear, very focused, and not overly ambitious. The agenda delineates between the items that will be discussed and those which would require action. For each item, if a handout is required then it is noted. All materials, including prior meeting minutes, are presented to the Committee at least a week in advance to enable ample time for review.

Meetings should be calendared 12 to 18 months in advance and reminders sent. If some members cannot be in attendance, provide the call-in information on the agenda and the reminders. Ideally, Investment Committees meet four times a year. Sometimes this is not realistic, so plan accordingly. Most importantly, set the date.

Enforce time limits for meetings. Investment Committee members are volunteers and often have jobs and other commitments they have to attend. If they can depend on the meeting ending on time and being efficient, they are more likely to regularly attend.

Strong Leadership

The role of the Chair is to facilitate discussion of the Committee, ensuring that the objectives of the agenda are met. An effective Chair will encourage communication and participation of all members. Sometimes conversations can become circular. It is up to the Chair to re-direct the conversation to the task at hand. If applicable, the Chair can identify choices and possible constraints. When necessary, the Chair can suggest follow-up items to assist in an effective continuation of the agenda item.

Diverse and Committed Committee Members

No two Investment Committees are alike but in general, the more successful ones consist of members with diverse backgrounds and experiences. There are benefits to blending professionals with finance and non-finance backgrounds.

Maintaining the continuity in committee membership is ideal. However, the volunteer nature of committees leads to regular turnover. In anticipation of this, have an orientation for new members or a new member packet that provides some historical context for the portfolio, the organization, and the challenges it has faced. Some examples may include cash flow needs, spending limits, investment restrictions, and/or liquidity needs.  The more committee members enjoy their experience,  the more likely they will stay on the committee. Providing a historical perspective and assembling a dynamic committee helps increase these odds.

It’s All About the Staff

The Executive Director or Chief Finance Officer should play an active role coordinating the agenda with the Chair, providing necessary updates, and facilitating communication between the investment committee and any outside professionals. Staff should coordinate and distribute meeting materials to ensure integrated packets are received well in advance. It goes without saying that staff is an invaluable asset!

Establish Annual Special Foci

Some examples of annual special foci could be:

  1. Continual risk assessment of the fund’s investment portfolio
  2. Review of the portfolio’s ESG policies
  3. Establishment of special sub-committees for alternatives such as private equity or real estate
  4. Review of the organization’s strategy and its impact on the fund
  5. Continual update of contributions and withdrawals of the fund
  6. Review of all fund expenses
Hallmarks of Effective Committees
  1. Know the organization’s mission and vision
  2. Understand the organization’s investment philosophy
  3. Focus on being strategic regarding deliberations and decision making
  4. Emphasize institutional perspective, not personal experience
  5. Continually ask the question, “Are there any problems?”
  6. Be patient!

There is no panacea to making meetings effective and worthwhile, but we feel following some of these best practices we have experienced will be helpful. Best of luck to your organization’s continued success!

Important Disclosure: This content is for informational purposes only. Opinions expressed herein are subject to change without notice. Beacon Pointe has exercised all reasonable professional care in preparing this information. Some information may have been obtained from third-party sources we believe to be reliable; however, Beacon Pointe has not independently verified, or attested to, the accuracy or authenticity of the information. Nothing contained herein should be construed or relied upon as investment, legal or tax advice. Only private legal counsel may recommend the application of this general information to any particular situation or prepare an instrument chosen to implement the design discussed herein. An investor should consult with their financial professional before making any investment decisions.

© Beacon Pointe Advisors. All Rights Reserved.


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