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Investment Stewards

Can more systematic and effective investment management process result in higher long-term returns?

FiduciaryPath offers two types of assessments for Investment Stewards – those who have legal responsibility for managing investment decisions that affect someone else’s money, including investment committee members and trustees of foundations, endowments and employee retirement plans – the Consulting Assessment and the CEFEX Certification Assessment.

Consulting Assessment – When the Steward requires advice on its fiduciary practices – FiduciaryPath offers the Consulting Assessment, which uses the methodology contained in the Consultant’s Assessment of Fiduciary Excellence, or CAFÉ * and can assist the Steward in developing:

• Documentation
• Processes
• Investment Practices

Certification Assessment – When a Steward wants to publicly demonstrate adherence to the Global Fiduciary Standard of Excellence, FiduciaryPath offers the Certification Assessment – independent analysis of the Investment Steward’s conformance to all investment fiduciary practices and criteria. Certification Assessment is a requirement for Certification with the Centre for Fiduciary Excellence – CEFEX. Successful completion of the Certification process results in public certification. This recognition implies that a fiduciary can demonstrate adherence to the industry’s best practices, and is positioned to earn the public’s trust.

This public acknowledgement of the Steward’s faithfulness to the Global Standard of Fiduciary Excellence is especially meaningful to boards of directors, donors, plan participants and staff.

*Certification Assessment may follow a Consulting Assessment. When a Certification Assessment is performed within six months of a Consulting Assessment, the fee is significantly reduced because the CAFÉ has already been completed.

Industry professionals who hold the Accredited Investment Fiduciary Analyst (AIFA) designation and have appropriate industry training and experience perform CEFEX assessments.

A successful certification process, as decided by the CEFEX Registration Committee, results in:

• A CEFEX certificate and Letter of Registration
• Registration in CEFEX’s public database, under Registered Firms
• Use of the CEFEX mark in both print and web form
• A News Release sent to the CEFEX distribution list. The release can be coordinated with the registered firm’s marketing activities.

 

Why Assess An Investment Steward’s Fiduciary Practices and Procedures?

For Foundations and Endowments

Improved Fundraising

• Helps to establish evidence that the Steward is following a prudent investment process
• Assures donors of the foundation’s or endowment’s excellent practices
• Certification differentiates the foundation or endowment
• Increases investor/donor/beneficiary confidence in the organization

Reduced Expenses

• Significant discounts on fiduciary liability insurance
• Increased organizational efficiency

Optimized Performance
Fiduciary process improvement as a result of fiduciary assessment often means better investment performance through identification of, and conformance to, appropriate procedures for:

• Diversifying the portfolio across multiple asset classes and peer groups
• Evaluating investment management fees and expenses
• Selecting Investment Managers
• Terminating Investment Managers that no longer are appropriate

• Encourages Stewards to compare their practices and procedures with those of their peers.
• Assists in establishing benchmarks to measure the progress of the Steward.

Reduced Risk

• Helps uncover investment and/or procedural risks not previously identified, which may assist in prioritizing investment management projects.
• Improved processes can mitigate losses both by reducing the likelihood of claims and by providing a strong basis for defense. A well-documented, prudent process is the best way to manage the risk of fiduciary liability.

For Employee Retirement Plan Sponsors


Improved Participation

• Helps to establish evidence that the Steward is following a prudent investment process
• Assures the board of directors, management and employees of the Steward’s excellent practices
• Certification differentiates the retirement plan from peers’ plans
• Increases beneficiary confidence

Reduced Expenses

• Significant discounts on fiduciary liability insurance
• Increased organizational efficiency

Optimized Performance
Fiduciary process improvement as a result of fiduciary assessment often means better investment performance through identification of, and conformance to, appropriate procedures for:

• Diversifying the portfolio across multiple asset classes and peer groups
• Evaluating investment management fees and expenses
• Selecting Investment Managers
• Terminating Investment Managers that no longer are appropriate

• Encourages Stewards to compare their practices and procedures with those of their peers.
• Assists in establishing benchmarks to measure the progress of the Steward.

Reduced Liability Risk

• Helps uncover investment and/or procedural risks not previously identified, which may assist in prioritizing investment management projects.
• Improved processes can mitigate losses both by reducing the likelihood of claims and by providing a strong basis for defense. A well-documented, prudent process is the best way to manage the risk of fiduciary liability.

Investment Stewards should consider requiring or preferring service providers that are CEFEX certified.  Preference for CEFEX-Certified service providers can help to ensure fiduciary diligence prevails throughout the investment environment.


 

See The Role of CEFEX Certification in Today’s Retirement Plan System.