Global Fiduciary Practices

As described in “Fiduciary Standards for Investment Stewards,” there are 22 best practices including supporting criteria, describing how an Investment Steward can prudently manage a plan’s investments.  Each practice is substantiated by regulations contained within the Employment Retirement Income Security Act (ERISA). These practices are itemized in “The Periodic Table of Global Fiduciary Practices” along with those governing prudent practices for Investment Advisors and Investment Managers.

Seven key fiduciary precepts have been identified from the controling legislation:

1. Know standards, laws, and trust provisions.
2. Diversify assets to specific risk/return profile.
3. Prepare investment policy statement.
4. Use prudent experts and document due diligence.
5. Control and account for investment experiences.
6. Monitor the activities of prudent experts.
7. Avoid conflicts of interest and prohibited transactions.

It’s about excellence.

Excellence is established by these 22 Practices, which are intended to provide the framework of a disciplined investment process.  These 22 Practices are organized under a four-step Fiduciary Quality Management System, consistent with the global ISO-9000 Quality Management System standard, which emphasizes continual improvement to a decision-making process.

For each of the 22 Practices, one or more Criteria are provided to establish the scope of the Practice, and to help define the details of the Global Fiduciary Standard of Excellence

• The  Practices represent the minimum process prescribed by law.
• The Criteria represent the details of the Global Standard of Excellence.

The 22 Practices are easily adaptable to all types of portfolios, regardless of size or intended use, and should:

• Help to establish evidence that the Steward is following a prudent investment process.
• Serve as a practicum for all parties involved with investment decisions (Investment Advisors, Investment Managers, accountants, and attorneys) and provide an excellent educational outline of the duties and responsibilities of Investment Stewards. 
  1. Diversifying the portfolio across multiple asset classes and peer groups.  
  2. Evaluating investment management fees and expenses.
  3. Selecting Investment Managers.
  4. Terminating Investment Managers that are no longer appropriate. 

• Potentially help to increase long-term investment performance by identifying more appropriate procedures for:
• Help uncover investment and/or procedural risks not previously identified, which may assist in protectinginvestment management projects.
• Encourage Stewards to compare their practices and procedures with those of their peers.
• Assist in establishing benchmarks to measure the progress of the Investment Steward.