A Church Trust Fund: It's Time To Turn The Lights On Folks.

Recently, I sat down with church trustees and I listened intently as each presented a view point on what, if anything needed to be done about the 3 million dollar portfolio they had been entrusted with preservation and protection. Some focused on costs, others on performance in the past 12 months, others on flexibility, (sustainable investing), others on account management change. None seemed to have the big picture of how each factor influenced another and the portfolio as a whole.

In fact, they all seemed to miss the elephant in the room: The asset allocation consisting scores of investments including nearly every category of investment from managed partnerships to individual stocks and bonds to mutual funds Wall Street had to offer, was unjustifiably complex. Given that many of these types of investments  what we fiduciaries well know slip back end and sales fees to those who sell these investments to investment pools like trusts, I wonder who’s interests are really being served; those of the trust or those of the investment manager?

A Shrouded asset allocation is what was offered on a request for complete disclosure because the managers declined to share ticker symbols which made every one of the bucket full of securities non-traceable and non-trackable. In addition, the managers continue to wave the fiduciary flag. Hmm! Just how trustees could accept such opacity for so many years is actually not unusual. In fact, I think it is quite common. Reason? No one on the Board was an investment professional. No one seemed have a comprehensive overview of the legalities, complexities, protocols, investment savvy and time needed to effectively manage large sums of money. The result is like driving in the dark with no headlights. You can’t see where you are going and you are far more likely to cause damage along the way.

I suggested something new: Hire an investment professional fiduciary bound only to the interests of the trust and its overseers to analyze the asset allocation, suggest changes, and write a comprehensive report for the benefit of the trust. I explained that one mistake today could cost the trust far more than any one-time fee or compensation paid to a fiduciary – even in the short run.  With such a report and insight, the trustees would have the knowledge and power to best match the goals and limitations of the trust to real world results. Although counter to today’s realities as reported in the Boston Globe by Sasha Pfeiffer, that is what I would hope for all philanthropies and trusts – but I guess I'm only dreaming that needs trump greed. Women Wealth Wisdom