The Business Exchange Swindon & Wiltshire Edition 46: Dec/Jan 2019 | Page 12

DOES YOUR INVESTMENT POLICY NEED SOME CPR? Charities and investment matters: a guide for trustees (CC14) recommends that if your organisation has investments, it should have a written policy that sets out what it is aiming to achieve through its investments. A written policy provides a framework for making investment decisions, helping trustees to manage the organisation’s resources effectively and demonstrate good governance. Regardless of size, having a written investment policy is important for all organisations with investment assets. Most organisations we come across have an Investment Policy or a Statement of Investment Principles. However, in most cases, the documents are either out of date or need some love. Often, it’s both. In many cases, the document was created by decision makers that are no longer with the organisation. Naturally, as your organisation evolves, so does the need to maintain and improve your investment governance. Without a robust set of documents, it’s very difficult to observe how your investment manager(s) is / are doing. Not only should there be aspirational performance objectives, your policy should also include appropriate benchmarks, any income requirements, tolerances to risk, ethical criteria, and diversification expectations. Naturally, many decision makers with an organisation have their own opinions on how this should look and therefore need help facilitating and documenting the objectives of the collective. Maintaining and reviewing the policy regularly is then paramount to ensuring the quality of your ongoing governance. When working with organisations, we assess whether their objectives are: • • • • Clear? Prioritised? Realistic? Measurable? In our experience, whenever we are presented with a policy document, almost every single one fails our CPR(M) test on one criterion. More than half fail on all four. The success of anything can only be measured when you are clear on what you are trying to achieve. 12 www.tbeswindonandwilts.co.uk Leaving significant amounts of monies in cash that you don’t need or can’t use - for example, permanently endowed funds - is no longer appropriate. Inflation is eroding capital because interest rates continue to be so low. Couple this with the uncertain economic background, both at home and overseas, and the need for sound governance has never been greater. The burden of ensuring that your investment portfolios are appropriately invested and can continue to deliver your objectives falls to trustees, financial directors and often other members of the senior management team. Where time is an issue, or trustees only meet a few times a year, we have seen many organisations employing professional advisers to help. This can remove an element of risk and ensure there is a constant eye on the portfolio. They can also help provide a valuable insight to help your organisation achieve your objectives and ensure that the investment solutions are appropriate, suitable and the strategy is repeatable. The value of investments and any income from them can fall and you may get back less than you invested. Past performance is not a guide to future performance. To find out more about Epoch Consulting email: [email protected] or call: 01225 727950 Epoch Consulting’s Max King