The Investment Committee Guide to Prudence

JJ’s investment career spans more than five decades.

Welcome to one of the April 15th stops on the blog tour for The Investment Committee Guide to Prudence by Jonathan Woolverton with Goddess Fish Promotions. Be sure to follow the rest of the tour for spotlights, reviews, and a giveaway! More on that at the end of this post.

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About the Book

The Investment Committee Guide to Prudence
Increasing the Odds of Success When Fulfilling Your Fiduciary Responsibilities in the Administration of Pension/Investment Assets
by Jonathan Woolverton

Published 30 December 2021
Tellwell Talent

Genre: Non-Fiction
Page Count: 274
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JJ’s investment career spans more than five decades. He has been the chief investment strategist for a pension plan sponsor, a managing director and senior consultant within a global investment planning consultant firm, and a managing director and chief operating officer of an investment management organization. Over his career, JJ has attended well over a thousand investment committee meetings as a plan sponsor, a consultant, and a money manager. In the majority of these meetings, he has found that committee members lack three things: in-depth investment expertise to effectively carry out their fiduciary responsibilities, the necessary time allocation to administer and manage the investment program in the best interests of the beneficiaries, and the ability to develop an efficient monitoring system to hold all service providers accountable for the products and services they provide.

This book outlines the steps to be taken in establishing investment policy; formulating asset mix strategy; creating an appropriate investment management structure; undertaking investment manager searches; and highlighting the conflicts of interest, biases, and self-interests of the various service providers.

This book is designed to assist members of investment committees in their role as fiduciaries/trustees/administrators.

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Exclusive Excerpt

In my experience working with external investment committees, I have found three main tendencies: first, in many cases, external investment committee members tend to lack the education and experience needed to carry out their fiduciary duties. These members may be brilliant in their own areas of expertise, and may be well educated and well meaning; however, there may be a significant disconnect between their various fields and the knowledge required to understand the investment business—particularly that of pension funds. Without this knowledge, it is difficult, if not impossible, for committee members to effectively formulate investment policy and set the standards for all service providers linked to the pension and investment fund activities. The second tendency of external investment committees is the lack of time and commitment allocated to their governance role (e.g., establishing, overseeing, administering, monitoring, analyzing, evaluating, and communicating the ongoing activities of the pension/investment funds).

And third, committee members, in most cases, tended to be short-term thinkers—reacting more emotionally and quickly to recent events. With limited knowledge of the mechanics of the components of the global capital market, they tend to be more like market timers—frequently wanting to move from one asset class to another, or from one manager to another, based on recent short-term results (i.e., acting more like the average buyer and seller of mutual funds).

For medium- to smaller-sized pension and investment funds, the internal committee is typically the only committee. Its members are selected or elected from inside the organization (either corporate, government sponsored, or multi-employer). However, the weakness of internal investment committees is the same as that of external committees—a lack of investment experience. Mid-size and larger pension and investment funds typically have a chief investment officer and/or a team of three to five specialists who are fully dedicated to managing the investment fund’s activities. As the assets administered under the plan sponsor get smaller,

the number of people responsible for pension activities declines to the point at which, within smaller organizations, there may be only one or two people who spend less than 100% of their time on the pension or investment program. Unfortunately, there is no surefire approach to filling positions on investment committees due to the dependence on the size of assets of the funds entrusted to the investment committee’s safekeeping.

The saying “a little knowledge is a dangerous thing” was, perhaps, never more meaningful than to an investment committee. Committee members, over time, may forget that their role is that of an administrator and begin to edge toward making decisions that fit more within the investment realm. They begin to think of themselves as market strategists. They begin to second-guess the investment decisions of the money managers, yet they have no process of measuring the success of their own actions. Investing is always easy—when critiquing the actions of others in hindsight.

About the Author

Jonathan J. Woolverton, CFA, has spent his whole career in the investment field—over fifty years. After graduating from university in Pennsylvania, he moved to Toronto, Canada, where he began his career in the investment department of an insurance company. In his role as investment officer he was responsible for formulating investment strategy and overseeing all investments within the equity and fixed-income divisions. JJ later joined Ontario Hydro as their chief investment strategist where all pension funds were managed internally.

JJ left the money management business to become an investment planning consultant. He was a founding partner and managing director of Frank Russell Canada. He moved back to the money management side as the managing director and chief operating officer of Guardian Capital Inc. JJ graduated from Westminster College with a BBA and achieved his Chartered Financial Analyst certification. JJ has published numerous articles on the pension and investment industries and has been the keynote speaker at many conferences and seminars.

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Giveaway Alert!

Jonathan J. Woolverton, CFA will be awarding a $15 Amazon or B&N gift card to a randomly drawn winner via rafflecopter during the tour.

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