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Best Practices for Investment Committees


Harness the power of the 401(k) investment committee to guard against financial liability and streamline your investment program

In today's complex, increasingly-litigious world, you must ensure that your investment decision process is sound and efficient. A well-managed investment committee is the key to survival and success.

Packed with numerous resources and examples, this clear guide will help you avoid legal and financial pitfalls and find answers to critical questions:

  • What constitutes a prudent committee selection and operation process?
  • How should a committee be governed?
  • How much reliance should a committee place on outside consultants?
  • How should committee members be selected?
  • How are best practices articulated and implemented?

You will learn to:

  • Serve successfully on an investment committee
  • Enable effective management
  • Implement a robust investment policy

An adept investment committee helps you identify crucial issues and get the job done right.

Rocco DiBruno, AIFA®, CIMA®, is a managing director and director of the Thornburg Retirement Group at Thornburg Investment Management. He has over thirty years' experience working with financial advisors and plan sponsors in the retirement plan sales, consulting, marketing, and product development. Rocco received his Certified Investment Management Analyst® (CIMA) designation from the Investment Management Consultants Association and his Accredited Investment Fiduciary Analyst® (AIFA) designation from the Center for Fiduciary Studies. He is also a frequent industry speaker on retirement industry trends and fiduciary governance.




CHAPTER 1: Why You Need a 401(k) Investment Committee 1

CHAPTER 2: Forming an Investment Committee 9

CHAPTER 3: Investment Committee Meetings 17

CHAPTER 4: Importance of Investment Policy 25

CHAPTER 5: Complying with Erisa Section 404(c) 31

CHAPTER 6: Selecting, Monitoring and Replacing Investment Managers 37

CHAPTER 7: Employer Stock in the 401(k) Plan 47

CHAPTER 8: Hiring a Pension Consultant 51

CHAPTER 9: Fiduciary Liability Insurance 61

CHAPTER 10: Understanding Investment Expenses & Fees 67

APPENDIX 1: Investment Option Evaluation Form 79

APPENDIX 2: Investment Committee Meeting Minutes 81

APPENDIX 3: Fiduciary Acknowledgment Letter 83

APPENDIX 4: By-laws and Operating Procedures for the Investment Committee 85

APPENDIX 5: Fiduciary Audit Checklist 91

APPENDIX 6: Glossary 95

APPENDIX 7: Resources 107