Investment governance is a conversation that has been taking place between academics, practitioners, and the financial services industry for decades now. The recent research by CFA Institute’s Research Foundation advances this discussion with its publication on fiduciary duty in investment management, which strives to establish best practices through transparency among all parties involved.
Investment governance is directional and relational: Investment governance is not just about compliance. There are many different features to look at, such as process and trust in the organization’s culture that goes beyond simple tweaks on investment policy statements or dazzled by an investment manager’s PowerPoint wizardry during beauty contest/manager selection time!
The world is switching, and so are we. As “purpose-driven” fiduciaries who believe in investing for the long term rather than making a quick buck or two (or ten), it’s our responsibility to create investment solutions that will meet not only today’s needs but also tomorrow morning when those same beneficiaries might have other priorities – like saving up some money just because they know something big may happen soon!
In the late 1980s, an anticipated return of 7.5% could be generated with just cash and bonds.
With a six-fold increase in expected volatility, it’s more important than ever to have an investment governance process that can keep up with changes. But many firms don’t know how much money they’re spending on this critical area of their business because funding formulas haven’t been updated since before the 2008 financial crisis!
OPERIS
The OPERIS framework provides a haven for beneficiaries to rest assured that their investment is protected from all potential mishaps. This ongoing process puts the needs of those who depend on it first, ensuring they receive high-quality guidance in return with every decision made about which assets will best meet future goals – even if this means waiting out any rough patches along life’s journey until things settle down again!
Too often, fiduciary boards answer with “to outperform peers.” This cannot be right! We believe that to attain the best outcomes for beneficiaries and manage risks intelligently (remembering there are always multiple threats), you need a holistic understanding of your investment problem.
Inputs to the Outcome
The fiduciary duty of an investment manager is to put their client’s assets in a position where they can generate the most return for them. This means that while monitoring and reviewing traditional performance measures, managers also need to understand how long it will take before fulfilling your defined-contribution plan’s retirement goal and what percentage chance there might be if you fail!
As investment outcomes remain subpar and institutional trust continues to erode, we must do all in our power — both internally and externally service providers—to create collaborative cultures that secure accountability.
We are stewarding other people’s money, whether in retirement savings or upon deposit. Fiduciary responsibility demands that we treat each client with care and respect so they can achieve their goals comfortably without worrying about how much is left for them at age 65; when you invest wisely, this becomes irrelevant because your investments will always provide stability during difficult times as well!
