Fiduciary Assessment

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Few organizations take the time to assess where they stand in term of fiduciary excellence, an important component to achieving the often elusive goal of long-term financial security and stability.

This SAFE (Self-Assessment of Fiduciary Excellence) is intended to assist:

 

• An investment steward in analyzing how well their organization meets a defined global fiduciary standard of excellence; and
• Investment stewards in improving their long-term investment performance

 

Each question is intended to be answered in the affirmative, "Yes." A careful inquiry should be made into all "No" responses to determine whether:

 

• There is an omission or shortfall in the investment steward's procedures; and/or
• The question is not applicable to the investment steward

 

This SAFE is intended to serve as a Level I Assessment. A Level II Assessment, known as a Consultant's Assessment of Fiduciary Excellence (CAFE), provides a more detailed analysis of the Investment Manager's practice. A Level III Assessment, or "Certification," is an independent recognition of a fiduciary's conformity to all Fiduciary Practices and Criteria, as defined by Centre for Fiduciary Excellence (CEFEX). It implies that a fiduciary can demonstrate adherence to the industry's best practices and is positioned to earn the public's trust.

Below are 22 questions that can help your organization improve and achieve your long-term goals. 

1. Are investments managed in accordance with applicable laws, trust documents, and written investment policy statements (IPS)?
2. Are the roles and responsibilities of all involved parties (fiduciaries and non-fiduciaries) defined, documented, and acknowledged?
3. Is there no indication that fiduciaries and parties in interest are involved in self-dealing?
4. Are service agreements and contracts in writing? Are they written without provisions that conflict with fiduciary standards of care?
5. Are assets within the jurisdiction of appropriate courts? Are they protected from theft and embezzlement?
6. Has an investment time horizon been identified?
7. Has a risk level been identified?
8. Has an "expected," "modeled" return to meet investment objectives been identified?
9. Are selected asset classes consistent with the identified risk, return, and time horizon?
10. Are selected asset classes consistent with implementation and monitoring constraints
11. Is there an IPS that contains the detail to define, implement, and manage a specific investment strategy?
12. Does the IPS define appropriately structured, socially responsible investment (SRI) strategies (where applicable)?
13. Is the investment strategy implemented in compliance with the required level of prudence?
14. Are applicable safe harbor provisions followed (when elected)?
15. Are investment vehicles appropriate for the portfolio size?
16. Is a due diligence process followed in selecting service providers, including the custodian?
17. Are there periodic reports comparing investment performance against an appropriate index, peer group, and IPS objectives?
18. Are periodic reviews made of qualitative and/or organizational changes of investment decision-makers?
19. Are control procedures in place to periodically review policies for best execution, "soft dollars," and proxy voting?
20. Are fees for investment management consistent with agreements and with all applicable laws?
21. Are "finder's fees" or other forms of compensation that may have been paid for asset placement appropriately applied, utilized, and documented?
22. Is there a process to periodically review the organization's effectiveness in meeting its fiduciary responsibilities?

Source: Centre for Fiduciary Excellence