Leading Effective Investment Committee Meetings

Leading the investment committee meeting is no different than leading effective, decision-making meetings in your day job. Effective meetings require preparation, a concise agenda and a focus on discussion and alignment. That means most of the time can’t be taken up with presentations that can be consumed in advance. The best leaders I’ve ever worked with read in advance and showed up with questions, ready to engage in discussion. Here are a few guidelines for running effective investment committee meetings.

1) Build Meeting Agendas and Send Materials in Advance

Meetings about “investing” can reasonably cover economics, geopolitical issues, organizational issues and nearly anything else someone wants to raise as an issue. Building clear meeting agendas and sending review materials ahead of the meeting will focus the committee on the task at hand for this discussion. Materials from consultants and managers should be shared ahead of time so that the meeting can be focused on questions and discussion rather than presenting the facts.

2) “Dive deep” instead of covering “everything every-time”

Often, successful committees focus their time on different areas of the investment policy throughout the year. One meeting on asset allocation and strategy, another on risk and another on spending policy. Another useful split is to focus each meeting on a major asset class. Discuss bonds and fixed income in one session, public equities in another. This allows you to dive deeper to make intelligent decisions and helps avoid short-term thinking dictated by “hot topics” in the market. Remember, your goals are spread across many years or even decades. This should help take the pressure off focusing on every hot market topic in every meeting. The investment policy statement provides a good outline of topics that should be reviewed on an annual basis. Supplement the key policy areas with asset class reviews and performance.

3) How long should the meeting be?

How long does it take, with a focused agenda, to make the decisions you need to make? How long will your members stay actively engaged? There is no perfect answer. Squeezing in too much content leaves members with unanswered questions. Blabbering on (technical term) results in lost focus. In our experience, if your investment committee meets 2-3 times each year, then 1.5 to 2 hours should be enough time to cover major topics without losing focus.

4) Should we vote? How much support should be required to make a decision?

Dissent is a healthy part of governance and good investment process. We believe that forcing unanimity may cause members to be less forthcoming about their concerns. Also, member selection may inadvertently lean towards those inclined to agree with the group for posterity. Dissent means that not everyone will agree, so voting is likely required for making decisions. We have seen successful boards use a voting process of 2/3 for decision making. This allows for some dissent and ensures the majority of the committee is aligned with the decision. Documented voting also allows the committee to review its decisions over time to see what worked and what did not go as planned. This creates the opportunity for continuous improvement in decision making and great long-term results.

Anyone, regardless of their level of investment expertise can lead an effective investment committee. We hope you find these four key considerations helpful for your organization. If you would like to discuss structuring or reviewing your investment process with a professional, please feel free to reach out to our team directly. We would be delighted to help!