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The Family Investment Committee Today

Many families (along with virtually all pension plans, charitable foundations, and endowed institutions) use investment committees to provide oversight of the management of their investment portfolios. Unfortunately, history has shown that most investment committees do a poor job of stewarding the assets entrusted to them. There are many reasons why the investment committee has proved to be such an unreliable tool. Let's take a look at some of them.

The Origin of the Investment Committee

The investment committee originated not out of the investment world but out of the world of board governance. Most boards, rather than acting at all times as a “committee of the whole,” delegate much of their important activity to committees—smaller groups of board members that are really subcommittees of the “committee of the whole.” This process of delegation improves the efficiency and productivity of a board, and has been enthusiastically supported by good governance groups such as the Association of Governing Boards of Universities and Colleges (known as the AGB).¹

The trouble is that the investment committee is fundamentally unlike other board committees. Virtually any board member, no matter what his or her professional background, can be a productive member of such committees as nominating (sometimes called the committee on trustees), executive, advancement, buildings and grounds, presidential search, and so on. Our general experience of life and business ...