Having an effective investment committee has become virtually a must for all but the smallest DC plans. A paper from PlanPilot offers some tips on building and running one:
• Size — smaller is better; try to have an odd number of members.
• Diversity — along with different functions within the company, consider achieving diversity by age, gender and ethnicity as well as skills, education and knowledge.
• Advisor — Should the plan advisor be part of the committee or at least attend meetings?
• Set term limits, especially for the chair.
• Quarterly meetings are usually sufficient unless the company is transitioning.
• Send out agendas before the meeting.
• Document committee meetings.
One question for small to midsize companies is whether the CEO should be part of the investment committee. Though it’s tempting to include the key decision maker, doing so can mute discussion and take away a layer of review. Do you think a CEO should be part of the committee? Share your comment below.
