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Optimizing the Selection of Investment Committee Members

Optimizing the Selection of Investment Committee Members

As we shared in Endowment Management for Higher Education, optimizing the selection of investment committee members is a crucial task that greatly contributes to endowment management success. To help committees make appropriate decisions beyond “time, talent, and treasure” considerations, we developed a grid of skills and attributes to help identify individuals for inclusion on a committee, which is a constructive way to guide thinking about maximizing the effectiveness of this group of five to eight members.

As you view the grid, please keep in mind:

1. Personality attributes are as important as subject matter expertise.

2. Seek to add two specific types of individuals: chief investment officers from similar institutions as well as non-investment professionals with good common sense and sound judgment.

3. Money management professionals are not always good committee members. While there is a benefit to having members with in-depth knowledge of certain asset classes, particularly alternative investments, there are some issues to consider. Money managers can be knowledgeable about their particular sectors, but may rarely think about risk/return tradeoffs associated with multi-asset class portfolios. There may also be a horizon mismatch between their day jobs (short) and endowments (long). Their work may also require great conviction and decisive action, which may not serve the more collaborative and inclusive nature of a well-functioning committee.

4. The most dangerous committee members are overconfident and impatient individuals who want to pursue market timing strategies and feel their voices are more valuable than others’. Committee members who are overconfident or impatient may undermine the deliberations of the committee.

5. Promote diversity.

6. Don’t consider “treasure” alone when asking people to serve. Time and talent contributions, in the right balance, can help an endowment committee achieve critical educational mission objectives.

Personality Attributes/SkillsRequiredGreat to HaveNot NeededNever Allow
Love of InstitutionAll
Asks big picture questionsAt least one
Reluctant to speak up even when they disagreeX
Speaks over others and demands their proposed action be takenX
Willingness to listen to others’ opinions, especially when different from theirsAll
Commitment to do required work of committeeAll
Tenure on Committee greater than 10 years to provide institutional memoryAt least one
Tenure on Committee less than 3 years to promote new ideasAt least one
CIO experienceAt least one
AttorneyAt least one
CEO / Senior Business LeaderAt least one
General Money Management ExecutiveX
Alternative Investment ExperienceAt least one
Diversity by gender, ethnicity, full scholarship kids / full pay kidsAt least one of each


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