PSNC 2017: Educating Investment Committees

A panel at the PLANSPONSOR National Conference discussed choosing investment committee members, as well as best practices for training them.   

By Amanda Umpierrez | June 14, 2017
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Teaching investment committees to monitor plan fees and take on fiduciary responsibilities is a bit like educating participants about their retirement plan. Gaining knowledge on the subject entails more than skimming through a 10-page pamphlet; it requires interaction among workers, plan sponsors, advisers, consultants—the list goes on.

“You have to bring in people who share an interest in making the plan better,” said Michael Rosenberg, senior vice president and head of retirement investment solutions at First Eagle Investment Management, on the type of individual who makes a good investment committee member.

Molly Knapp, retirement plan consultant for Sequoia Consulting Group, specified appointing employees who have related experience, such as a chief financial officer (CFO), a vice president of human resources (HR) or members of accounting, legal and finance departments.

Shale Latter, retirement plan consultant for CapTrust Advisors LLC, warned plan sponsors against forming large committees and, instead, recommended five or seven members as an ideal size. An odd number works best for voting purposes, he said.

Additionally, said Knapp, double-check to see whether any participants asked to serve on the committee are counted as voting members or nonvoting members. If the latter, they would not be deemed fiduciaries to the plan—as voting members would be—because they are unable to make final decisions. Rather, the function of nonvoting members is to provide input, she said.

To solidify the roles and responsibilities committee members will perform, as well as short- to long-term goals, she urged sponsors to establish a committee charter, one that is signed by representatives of the company’s board of trustees and, as they join, committee members themselves. Knapp advised plan sponsors to keep the charter relatively general, should, for instance, procedures need to be revised, a meeting not be held, etc. “You want one that doesn’t limit you,” she said.

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