Greg Lindae an accomplished financial professional with over twenty years’ experience is proficient in venture capital, buyouts, Real Estate and infrastructure amongst many other areas. He now uses his expertise to also be a member of investment committees. Starting an investment committee requires the draft of a chair person who will then decide how to select the other members of the committee. The purpose of the committee will be to establish a formal procedure to manage the investment strategy. Some members can be able to vote, and some may not. The investment matters that they are in charge of are known as the fiduciary responsibilities.
There will be specific job roles for members of the committee, but the main responsibility will be the successful running, and of the finances, in line with the strategy laid down by the chair person. Financial experience wouldn’t be a necessity, but it would probably make the job easier unless you fancied a whole new undertaking with lots of things to learn and get your teeth into.
So once the committee were established they would have many tasks to do, they would need to develop an Investment Policy Statement. This statement would need to include due diligence procedures for selecting where to invest and monitoring the investments. It should include what performance you expect from the investments, at a minimum. It must also include the process that the committee should use for choosing investment managers and also when they need to replace them, this is to eliminate any favors or investing with friends and so on behalf of the committee. This document should be reviewed on a yearly basis to ensure continued success. At all times the committee should be checking that any actions are in line with this policy.
The financial status of the committee’s investments should be reviewed annually if not six-monthly. A report should be prepared for the company’s board of directors
To facilitate and ensure that these tasks are done the committee need to hold regular meetings. Before these meetings all committee members should receive an agenda and the current state of play for the investments. Meetings should be held every quarter if possible but every six months without fail. The full investment portfolio should be discussed and analysed and any causes for concern should be mentioned by any member of the investment team who feels concerned about anything, no matter how trivial it seems.
This will ensure that the committee can prove that a prudent process is in place and decision making is informed and investigated. This means that the discussions and outcomes of the meetings must be adequately documented. A fiduciary audit file should confirm all investments and profits and losses.
Each committee member must be shown to take their job seriously. They should be aware that lack of doing so and lack of communication between them and the other members could be classed as a fiduciary liability. This will not be taken lightly and could lead to financial penalties.
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