The Duties, Roles, and Responsibilities of Investment Committees

An Investment Committee is a group of individuals who are responsible for the management of an organization’s investments

The Investment Committee typically meets on a regular basis to review the organization’s investments and make recommendations about how to best grow and protect the organization’s investment portfolio.

How Investment Committee Works

The Investment Committee typically includes a mix of Investment Managers, Investment Committee Members, and Investment Committee Administrative Assistants. 

An Investment Manager analyzes investment options and allocates funds within the investment portfolio to maximize returns. Investment Manager positions are often offered as full-time positions or part-time consulting positions at smaller organizations. 

In larger organizations or Investment Committees, Investment Managers may be brought in on a consulting basis. 

Duties and Responsibilities of an Investment Committee

The Investment Committee is responsible for the management of an organization’s investments. This includes, but is not limited to: 

Establishing Investment Policy

The Investment Committee is responsible for developing and approving the Investment Policy, which is a document that outlines the organization’s investment goals, strategies, and constraints. 

Oversee the Implementation of Investment Strategies

Once Investment Policy has been established, the Investment Committee is responsible for overseeing the implementation of investment strategies that will meet those goals.

Monitor Investment Performance

The Investment Committee monitors investment performance and works to correct under-performing investments or bring additional funds into over-performing ones. 

Make Investment Recommendations

When necessary, the Investment Committee makes recommendations to Investment Managers about how to make changes to the Investment Policy.

The Investment Committee additionally works closely with the Investment Administrative Assistant, who prepares materials for Investment Committee meetings and schedules conference calls or face-to-face meetings with Investment Managers. 

Selecting Investment Managers

The Investment Committee is responsible for selecting Investment Managers who will be responsible for allocating funds within the investment portfolio and maximizing returns. 

Conduct Financial Reviews

The Investment Committee is responsible for reviewing the organization’s financial position and making recommendations about where to invest funds. 

Provide Investment Expertise

When Investment Managers are brought in on a consulting basis, the Investment Committee may also provide Investment Management expertise throughout the process.

Importance of Investment Committee

The Investment Committee is responsible for ensuring that an organization’s investments are managed in a way that aligns with the organization’s goals and objectives. 

An Investment Committee can provide added value to an organization by: 

  • Helping to ensure that investment decisions are made in alignment with the organization’s overall strategy.
  • Acting as a buffer between Investment Managers and Investment Administrative Assistants, which helps Investment Administrators to focus on other responsibilities.
  • Providing Investment Management expertise throughout the investment process.
  • Maintaining Investment Policy, which outlines an organization’s investment goals, strategies, and constraints.
  • Reviewing Investment Performance and making recommendations to Investment Administrators about how best to maximize returns.
  • Overseeing Investment Administrators and Investment Managers, to ensure that problems or issues are addressed swiftly and decisively.
  • Working with Investment Administrators to create Investment Policy and Investment Performance reports.

By filling this role within an organization, committee members can make a significant contribution to the overall success of their organizations.

Best Practices of Investment Committees

There are a number of best practices that Investment Committees should adhere to in order to ensure that they are functioning effectively. 

Some of these best practices include: 

Regular Meeting

It is important for Investment Committees to meet on a regular basis in order to discuss updates on investment performance, changes to the Investment Policy, and any other concerns or issues that have arisen. 

Minuting Investment Committee Meetings

In order to make sure that all decisions and recommendations are properly documented, Investment Committees should minute their meetings. 

This documentation can be used in the future to reference decisions made and track the progress of the investment portfolio. 

Being Transparent

Investment Committees should be transparent about the Investment Policy and Investment Performance, as well as about Investment Manager recommendations. 

Investment Committees must ensure that Investment Managers and Investment Administrative Assistants are aware of Investment Policy and Investment Performance updates.

This transparency can help Investment Committees to gain credibility with Investment Managers and Investment Administrators, which in turn helps Investment Committee members to do their jobs more effectively.

Recording Decision-Making Processes

In order to ensure that decisions are systematically recorded and properly documented, Investment Committees should document the Investment Committee decision-making process.

By following this practice Investment Committees can avoid inconsistency and confusion, which can help Investment Managers and Investment Administrators to make more informed investment decisions.

Keeping Investment Information Confidential

In order for Investment Committees to make effective recommendations, they need access to Investment Manager performance data as well as investment holdings. 

However, Investment Committees must keep this information confidential in order to avoid any potential conflicts of interest. 

Who Should Serve on an Investment Committee?

There are no specific qualifications that are required to serve on an Investment Committee; however, it is important that Investment Committee members have a strong understanding of the investment process. 

Ideally, Investment Committee members should have a financial background and/or be Investment Managers so that they can provide an informed perspective on Investment Policy and Investment Performance matters.

Key Takeaways

Investment Committees are responsible for overseeing the Investment Administrators and Investment Managers who are responsible for an organization’s investment portfolio.

Investment Committees help Investment Administrators and Investment Managers to ensure that Investment Policy is being carried out effectively. Investment Performance is being monitored closely.

They also check if Investment Managers are following Investment Policy recommendations, and Investment Manager recommendations are being addressed swiftly and decisively.

An Investment Committee is a committee that is responsible for overseeing the Investment Administrators and Investment Managers who are responsible for an organization's investment portfolio.
The Investment Committee meets regularly in order to discuss updates on investment performance, changes to the Investment Policy, and any other concerns or issues that have arisen.
An Investment Committee is important because it helps Investment Administrators and Investment Managers to ensure that Investment Policy is being carried out effectively. Investment Performance is being monitored closely.
There are no specific qualifications that are required to serve on an Investment Committee; however, it is important that Investment Committee members have a strong understanding of the investment process.
Ideally, Investment Committee members should have a financial background and/or be Investment Managers so that they can provide an informed perspective on Investment Policy and Investment Performance matters.

True Tamplin, BSc, CEPF®

About the Author
True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.