Fiduciaries are tasked with ensuring that an organization manages its financial resources to ensure the fulfillment of the institution's mandate both presently and in the future. They are required to make decisions to prudently manage all assets of the organization. Fiduciaries may delegate certain responsibilities to staff, committees or experts (investment professionals, legal advisors); but they maintain the ongoing obligation of duty of care. Fiduciaries must remain informed of the institution's activities and be prepared to take action if necessary.
As it relates to investing of assets under fiduciary care, there are three primary points that a fiduciary must adhere to:
1) Duty of Care
Fiduciaries must be able to demonstrate that they always act in the best interests of the organization. As a fiduciary you are required to take the time to evaluate all of the material presented and make a decision in the best interest and consistent with the values and objectives of the organization.
As it relates to decisions regarding the investment of organizational assets, one must ensure that you have a deep understating of your organization and the role the investable assets play.
Fiduciaries have a loyalty obligation to the organization that they must adhere to. This loyalty obligation results in the fiduciary's ability to avoid conflicts of interests and personal biases. A fiduciary must also ensure they disregard any personal, business or social interests. Understanding your organization and its objectives may help a fiduciary realize that the organization's investment needs may differ significantly from their own personal investment needs.
As it relates to investing organizational assets it is imperative that the characteristics of the investment portfolio are appropriate to the needs of the organization and not necessarily those of the fiduciary. A common oversight for fiduciaries is to allow personal investing biases, attitudes or constraints to impact their judgement. To adequately fulfill your obligation as a fiduciary an unbiased investment portfolio must be constructed that reflects the mandate of the institution.
Fiduciaries must adhere to all current organizational policies and procedures. In addition to this they must ensure that the decisions they make on behalf of the organization adhere to all applicable laws, funding agreements and articles of incorporation.
*As it pertains to investing institutional assets, the development and periodic review of an Investment Policy Statement (IPS) is the ideal tool to assist volunteers in the fulfillment of their fiduciary obligations. The team at MP Wealth Advisory will work with you and your organization to ensure the development of a customized IPS, that will reflect the needs of your organization.