If you read the last article in this series, [Why Consider Setting up An Investment Committee], you may have decided it’s time.  Here are a few things to keep in mind when forming an investment committee.

You should…

1    Adopt formal committee bylaws (also known as a committee charter) that clearly explain the responsibility of the committee.

In general, the committee has the following responsibilities:
– Meet regularly
– Develop an investment policy statement
– Select and remove or replace investment managements
– Evaluate the managers performance and take appropriate actions when needed
– Monitor the activities of prudent experts and plan providers
– Review investment management fees paid by the plan and participants
– Review procedures for providing financial and operational information to the board (if applicable)

2    Appoint an appropriate number of committee members.

Ideally you want five to seven members. (An odd number makes it a whole lot easier when you’re voting.)  Less than five members and you lack perspective. More than seven and it becomes difficult to get anything done.

3    Each member should receive an education or information packet and acknowledge that they’ve read and understand that they have fiduciary responsibility.

At a minimum, all fiduciaries (including incoming committee member) should be given, and read, material that will help them understand and perform their duties accordingly. This includes (but is not limited to):

– Committee Charter
– DOL Guide, Meeting Your Fiduciary Responsibilities
– Summary Plan Description
– Investment Policy Statement
– Past meeting minutes

This article is just one in a series on Best Practices for Investment Fiduciaries. Click here to access the entire series.