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Episode 035: Great Governance for Your Investment Committee with Becky Wood

June 27, 2018

If you’re involved in a family foundation, a family office, or if you sit on the board of nonprofit with an endowment, you likely know something about the importance of an investment committee. In this episode, Ellie is joined by Rebecca (Becky) Wood of Fund Evaluation Group (FEG). Becky is a Managing Principal and Head of Institutional Services with FEG. She’s had a long-time relationship with Ellie’s family’s foundation and even helped establish its first investment committee more than two decades ago.

Becky is a tremendous resource. During this interview she helps us understand what great governance looks like and how to achieve it. She describes the different levels of fiduciaries, what makes up an investment policy, the importance of asset allocation and time horizon, who should be on an investment committee and tips for investment committee success.

Find Becky and learn more about Fund Evaluation Group at feg.com.

If you like this topic, you might also find value in:

  • Episode 020: Women and Wealth with Adrienne Penta
  • Episode 022: Getting Started in Family Philanthropy with Colleen Mitchell
  • Episode 031: Impact Investing with Jennifer Oertel

Topics discussed in this episode:

  • Intro to topic (0:38)
  • Meet Becky (3:03)
  • What does great governance mean? (4:25)
  • Spenddown or perpetuity? (5:18)
  • I have a pool of money, now what? (8:21)
  • What’s a fiduciary and how does this all work? (11:05)
  • What’s in an investment policy? (15:03)
  • The importance of asset allocation and time horizon (16:51)
  • What questions do you ask an investment committee? (18:50)
  • Who is on the investment committee? (20:24)
  • What does a successful investment committee look like? (22:00)
  • Resources (28:53)
  • How to find Becky (31:49)
  • Bonus questions (32:03)

Guest Bio:

Rebecca Wood, Fund Evaluation GroupRebecca (Becky) Wood has been an investment professional since 1987 and part of the Fund Evaluation Group (FEG) team since 1992. Becky is a Managing Principal and Head of Institutional Services with FEG. She has a BS in Arts and Science from Xavier University. Outside of her role at FEG, Becky is an Advisory Board Member with Hospice of the Bluegrass, on the Board of the Sustained Dialogue Institute and part of Xavier Finance Board of Executive Advisors.

 

 

Great Takeaways from Becky:

An investment policy should include:

  • Purpose and goal to achieve your long-term mission
  • Asset allocation
  • Aspects about risk
  • Manager selection
  • Day-to-day supervision—who does what?
  • Guidelines—what can and can’t be done in the portfolio?
  • Benchmarking—How are your individual managers doing? How is the portfolio performing as a whole? Are you achieving spending +CPI? How are you doing relative to peers? How will you evaluate performance and who’s accountable?  

Three main levels of fiduciaries:

  1. Governing – Board
  2. Managing – Investment Committee
  3. Operating – Investment Managers or Custodians

The makings of a successful investment committee:

  1. A great investment committee chair. Someone who ensures everyone on the committee has a voice.
  2. A strong investment policy. This document will prevent poor decisions based on emotion, especially in a down market.  
  3. Good documentation. Show that you are making good decisions on behalf of the organization.
  4. Clear member terms. You want to prevent mass turnover. Maintaining some continuity is helpful.

Notable & Quotable:

You need an investment committee for any pools of money that have a long-term investment horizon in which you need good governance and guidance to do right as a fiduciary for an organization. —Becky Wood


Do you want to have a legacy that continues to good for the world after your gone or do you want to see the good being done while you are here on Earth? —Becky Wood


As a fiduciary you are speaking for the entity or organization, not yourself. —Becky Wood


The ideal size for an investment committee is 5 to 11 people. —Becky Wood


Asset allocation is the biggest determinant of your success. —Becky Wood


‘Commit’ is a very important part of being a member of an investment committee. —Becky Wood


Resources mentioned in this episode:

  • Fund Evaluation Group
  • FEG PDF: Building Great Governance and Fiduciary Roles
  • Pioneering Portfolio Management by David Swensen
  • Foundation and Endowment Investing by Larry Kochard
  • Vanguard’s Sample Investment Committee Charter
  • Upcoming FEG educational seminars and conferences
  • Association of Governing Boards of Universities and Colleges
  • Foundation Source

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Want more of Successful Generations? Check out our other episodes: 

Episode 034: Trapped in the Family Business with Dr. Michael Klein, Part 2
Episode 033: Trapped in the Family Business with Dr. Michael Klein, Part 1
Episode 032: Spendthrift or Tightwad with Dr. Scott Rick
Episode 031: Impact Investing with Jennifer Oertel
Episode 030: Holistic Weight Management with Cynthia Damaskos
Episode 029: Giving Back Through Giving Circles with Dr. Jason Franklin
Episode 028: The Family Business Podcast with Russ Haworth
Episode 027: The Power of Mindset with Dr. Nancy Jonker
Episode 026: Reflections from Four Decades in Philanthropy with Rob Collier
Episode 025: Power20—10 Ways to Set Your NextGen Up for Success in the Family Enterprise
Episode 024: Pump it Up! Strength Training and Leadership Development
Episode 023: Leadership Development and Agility with Greg McCann
Episode 022: Getting Started in Philanthropy with Colleen Mitchell
Episode 021: Taking Over the Family Business with Mitchell Kaneff
Episode 020: Women and Wealth w/ Adrienne Penta
Episode 019: The Allyn Family 2.0, Part 2
Episode 018: The Welch Allyn Family Business Story with Eric Allyn (4th Gen), Part 1
Episode 017: Achieving Your Goals through MasterMind and Peer Groups
Episode 016: Reframing Limiting Beliefs with Ellie Frey Zagel
Episode 015: Beyond the Piggy Bank with Father, Author, and Entrepreneur Clint Greenleaf
Episode 014: More Awareness and Less Stress through Yoga
Episode 013: Raising Children to be Amazing Business Owners with Paige Cornetet
Episode 012: Generous Genes with Susan Crites Price
Episode 011: Digging into the Family Business Landscape with Daniel Van Der Vliet
Episode 010: 10 Things My Family Did to Engage us in Family Philanthropy
Episode 009: Stress Management and Holistic Health with Cynthia Damaskos
Episode 008: Family, Fights and Ferry Tales with Chris Shepler
Episode 007: Raising Financially Responsible Kids Through the Holidays (and Beyond)
Episode 006: Join the Philanthropic Revolution with Michael Moody
Episode 005: Estate Planning 101 aka Estate Planning is Not Optional with Susan Gell Meyers 
Episode 004: Ginny Esposito – Engaging your Family in Family Philanthropy
Episode 003: Leadership, Wellness, and Concierge Medicine with Dr. Bill Baer
Episode 002: Douglas D Box, Texas Patriarch – A Legacy Lost
Episode 001: About Your Host Ellie Frey Zagel

Learn more about Successful Generations:

FB: @SuccessfulGenerations
Twitter: @EllieFreyZagel
Email: ellie@successfulgenerations.com
Instagram: SuccessfulGenerations


Have a topic suggestion?

If you are the next generation of family business, philanthropy and wealth, and have a topic you think we should discuss, let us know at Ellie@successfulgenerations.com.

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Family Philanthropy

Ellie Frey Zagel

Ellie Frey Zagel is 3rd Generation, Vice Chair and Trustee of her family’s foundation the Frey Foundation based in Grand Rapids, MI. For nearly a decade she has been deeply involved in working with the next generation of family business, family philanthropy, and family wealth, first as Director of the Family Business Alliance and now as President of Successful Generations, a company she recently founded.

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