February 18, 2020

Top Five Items to Check Off Your Fiduciary Checklist

As the New Year unfolds, it’s important to emphasize the critical role each investment committee member takes on as a fiduciary. Fulfilling these responsibilities is paramount in ensuring a smooth governance process.  Most endowments and foundations are subject to UPMIFA, the Uniform Prudent Management of Institutional Funds Act.  At its core, UPMIFA requires the Board, Committee, and any others responsible for the management of institutional funds to act in good faith and with the care of a prudent or ordinary person.

Best practices for managing an endowment or foundation frequently means establishing a checklist of items to be completed or reviewed during the year.  If your organization currently does not have a “fiduciary checklist,” we encourage you to develop one!  The checklist can be as streamlined or comprehensive as you feel is necessary. No one size fits all, and checklists are almost always customized for each institution’s needs.

Each decision that is made in the administration and management of the portfolio is subject to fiduciary standards.  Here we highlight five very important areas to review as part of your checklist:

1) Scheduling meetings

Schedule Committee meetings as soon as possible. While this seems intuitive, it’s always good to establish key dates for committee members and others to ensure things run smoothly throughout the year.  Most Committee members are volunteers and have busy lives, so establishing your meeting dates far in advance will help with planning and building a quorum at every meeting.

2) Asset allocation review

The asset allocation decision is one of the most important decisions a fiduciary can make.  Ensuring the asset allocation will meet future return needs for a reasonable level of risk is therefore an important fiduciary consideration.  With interest rates declining significantly in 2019, portfolio return expectations have declined as well.  Taking stock of your institution’s risk and return goals and assessing your portfolio’s asset allocation relative to those goals and to market expectations is key in order to reduce the risk of missing the return goal over the next market cycle.

3) Manager oversight

Investment managers are typically reviewed on a quarterly basis for performance against appropriate benchmarks and a universe of peers.  Additionally, it’s central to your role as fiduciary to review management fees to ensure they are reasonable. Taking this a step further, proper fiduciary oversight would be to also evaluate the managers’ style and philosophy against the objectives and benchmarks of the IPS.  Underperformance is not necessarily a reason to terminate an active manager, but it does require analyzing any changes to the decision-making team or to the process to ensure they are still in line with the investment’s objectives within your portfolio.  Communication with the manager may help in understanding any recent underperformance and to build confidence in the strategy.

4) IPS review

For some institutions, once an IPS is developed, it sits in a drawer and is never seen again.  Best practices for fiduciaries suggests the importance of reviewing the IPS at least annually.  Frequently, asset allocation ranges and targets may become out of date, or corresponding benchmarks for the underlying managers or overall portfolio policy may have changed.  Finally, the target return and spending policy should be reviewed to ensure they are both consistent with current needs.

5) Fiduciary education

If it’s been a while since your institution has undergone fiduciary training, 2020 may be the year to do so.  Reviewing your governance structure, supporting documentation process, and delegation of duties is always good to have front-of-mind.


In fulfilling your fiduciary requirements, UPMIFA doesn’t necessarily focus on the outcome itself, but rather the process by which decisions are made. A fiduciary checklist can help ensure that you have a process is in place and are following it on an annual basis. Checking these five items off in 2020 will help ensure your governance process is sound from a fiduciary perspective.