It’s the end of the year. This is usually the time to take an accounting of the prior year’s events and a time to make New Year’s Resolutions about what you’re going to change. As for accounting what happened in the prior year, that will be incorporated in our next monthly newsletter, so stay tuned. As for New Year’s Resolutions? That initially sounds like a personal to-do item – not really relevant to investments, fiduciary governance, or finance.
Here’s an easy question: what’s the most typical New Year’s Resolution. Personal fitness, right? Lose weight. Go the Gym. Get in better shape. It’s a little strange this is such a common goal for all of us (myself included) since the solution is so well known: adjust your diet and exercise regimen. That’s it. On the other hand, we recognize that it’s usually easier in the short term to lie down and resist improvements, but the long term goals are worth achieving. So, we need to remind ourselves to do the right things with a New Year’s resolution. We enlist the help of our friends and family to encourage us towards these goals. We even hire personal trainers to engage and motivate us. Yes, your trainer can act as a nutritionist (helping you with portion control or the newest superfoods) and as a fitness specialist (tailoring workouts to your specific goals like building muscle mass, improving flexibility or cardiovascular health), but a great value of the trainer is simply someone to apply a sense of measurable discipline to your efforts.
Bringing the topic back to investments: think of your consultant as your trainer. Most of the broad precepts of investing are well known: know what you’re paying for, monitor your investments and service providers, and make sure your investments are structured to attain your goals. Certainly, a knowledgeable consultant will know all that and act as a specialist to optimize your path through the latest requirements of legal safe-harbors or make sure your asset allocation is still optimized to your long term goals, given the latest quarterly market assumptions. However, a great value of your consultant is the sense of rigor and methodical discipline they should provide. You should have checklists of which governance documentation and due diligence reports are archived. You should have a rotating schedule of fiduciary education, safe harbor analyses, and disclosure reviews. Just like a trainer watches for measurable success in your personal fitness, your consultant should be able to point out real world successes in participant retirement outcomes or charitable mission fulfillment, as well as the reduction of liability for board and committee members.