If you are like me, most of the Investment Committee meetings that you lead focus on investment fund performance. Unfortunately, there isn't much anyone can do about past performance. A recent survey of Investment Committee practices conducted by Vanguard Investment Counseling & Research shows that most Investment Committees spend the majority of their meeting time talking about things they can't do anything about. The biggest offender - past investment fund performance.
According to the Vanguard survey, the average Investment Committee spends 51% of its time talking about past performance - more than all other issues combined. Additional items that Vanguard believes Investment Committees should spend less time on include:
- Manager changes;
- Evaluating investment strategies; and
- Monitoring financial markets.
Please keep in mind that Vanguard is not recommending that Investment Committees stop paying attention to performance or the other 3 items outlined above. Rather, Vanguard recommends that Investment Committees should spend less time with those items and more time with issues they can control like:
- Costs;
- Asset allocation;
- Investment menu/portfolio construction;
- Spending;
- Plan design;
- Due diligence;
- Risk; and
- Transparency.
As you prepare to meet with your Investment Committee's to review first quarter, 2013 performance, it may be helpful to keep these suggestions in mind.
Contributing Editor Robert C. Lawton is President of Lawton Retirement Plan Consultants, LLC a Registered Investment Advisory firm helping retirement plan sponsors with their investment, fiduciary, employee education and compliance responsibilities. Mr. Lawton has over 25 years of experience working with corporations on their retirement plans and is a Chartered Retirement Plan Specialist (CRPS) and Accredited Investment Fiduciary (AIF). He may be contacted at bob@lawtonrpc.com or 414.828.4015.
