Part 11: Investment Committees and Advisory Boards

What the Investment Committee Does

An investment committee is a senior staff group that oversees the office's investment activity. It can review the portfolio, evaluate allocations, consider managers, and discuss investment risks and implementation. New investments often pass through the committee after an initial screen, so the meeting can focus on decisions rather than a flood of opportunities.

The committee's work should support the long-term preservation of capital and carry out the investment policy it has been given. Its size and meeting frequency will depend on the office and its portfolio.

Choose Members and Meeting Frequency

Most single family offices have three to five permanent committee members. The CIO usually leads the meetings and coordinates the members. Investment professionals are central, though staff with useful legal, accounting, or management experience may also contribute. Family members can attend when their interest or role makes their participation useful.

Keep the group focused on decision makers and essential personnel. An odd number of voting members can help the group settle smaller decisions. If the family prefers not to attend regularly, have someone record minutes and provide reports, including a CIO summary of significant changes. Keeping the family informed can help avoid a sudden shift in involvement later.

Set the meeting schedule according to how quickly each part of the portfolio changes. A portfolio with managers that need constant monitoring may call for frequent meetings. Real estate holdings that need only a quarterly review can be handled on a different schedule. The people and topics in each meeting should match the work being discussed.

Set Authority and Meeting Rules

Before the committee begins, the CIO, CEO, and family should settle how it will operate. Decide who has final authority: the head of the family, the CIO, or a committee vote. An explicit chain of command helps prevent confusion and indecision when an investment is under consideration.

Put the committee's mission, structure, and voting power in a Charter. Give meetings a clear agenda, record minutes, and keep discussion on schedule. A designated person can prepare the agenda and track time so that one member or a series of unrelated topics does not take over.

Debate can be useful when it is managed well. Members should be able to raise different views about an allocation or strategy, while a meeting leader keeps the discussion focused and moving toward a decision.

Some offices may benefit from separate strategic and tactical groups. The strategic committee can set major asset and geographic allocations. A smaller tactical group can consider portfolio adjustments more frequently. The arrangement should fit the office's decision needs and the members' availability.

Bring in Outside Advice

An advisory board is a consultative group of executives and experts from outside the family office. It may meet quarterly or annually to discuss strategy, management, and issues where the chair wants outside input. Members can bring expertise in areas such as corporate management or entrepreneurship, and the office may also seek their advice between formal meetings.

The two groups serve different purposes. The investment committee oversees investment activity and decision making. The advisory board offers outside counsel on broader questions. A strong committee and advisory board can support better hiring, operations, governance, and responses to management or investment crises.