Empowering Investment Committees

Empowering Investment Committees

As the industry trends towards more flexible platforms and managed accounts, service providers and insurers are requesting more often that practices engage with experts to manage risk. One area, in particular, that is gaining more attention is the investment committee.

Investment committees form an important part of the governance structure of any wealth management business. In general, they are responsible for all issues related to client money. In that sense, they are distinct from the kind of investment committee that a large corporation would have, where the main responsibility is to identify and oversee investment opportunities for the company’s own capital. One thing that they have in common though is that there should be an appropriate delegation from the board in place so that the investment committee has the necessary authority.

In its stewardship role, the key areas of responsibility are typically:

  • Strategic and dynamic asset allocation and manager selection for model portfolios,
  • Oversight of the Approved Product List,
  • Identifying critical issues and proposing resolutions.

Most investment committees do not “manage” portfolios, but in a similar vein to a board, test and approve the work of the investment specialists in the practice. It is usual for the investment specialists on the team to participate in the meetings, although they may not have a vote. It is also not unusual to have a representative from the Compliance team to ensure that action items, communications and processes are within the regulations.

At Harbour Reach, we can help in two main areas; strategic and dynamic asset allocation, and manager or product selection.

Drawing on elements of our Investment Strategy service, for example, our long-term capital market assumptions, we can work with investment specialists to provide a bespoke set of solutions to advisers that are specific to your firm.

In addition to portfolio management, investment committees also benefit from our experience of governance, risk management and problem-solving.