Best Practices for Investment Committees

Harness the power of the 401(k) investment committee to guardagainst financial liability and streamline your investmentprogram

In today′s complex, increasingly–litigious world, you mustensure that your investment decision process is sound andefficient. A well–managed investment committee is the key tosurvival and success.

Packed with numerous resources and examples, this clear guidewill help you avoid legal and financial pitfalls and find answersto critical questions:

What constitutes a prudent committee selection and operationprocess? How should a committee be governed? How much reliance should a committee place on outsideconsultants? How should committee members be selected? How are best practices articulated and implemented?

You will learn to:

Serve successfully on an investment committee Enable effective management Implement a robust investment policy

An adept investment committee helps you identify crucial issuesand get the job done right.

FOREWORD vii

INTRODUCTION ix

ABOUT THE AUTHOR xi

CHAPTER 1: Why You Need a 401(k) Investment Committee 1

CHAPTER 2: Forming an Investment Committee 9

CHAPTER 3: Investment Committee Meetings 17

CHAPTER 4: Importance of Investment Policy 25

CHAPTER 5: Complying with Erisa Section 404(c) 31

CHAPTER 6: Selecting, Monitoring and Replacing Investment Managers 37

CHAPTER 7: Employer Stock in the 401(k) Plan 47

CHAPTER 8: Hiring a Pension Consultant 51

CHAPTER 9: Fiduciary Liability Insurance 61

CHAPTER 10: Understanding Investment Expenses & Fees 67

APPENDIX 1: Investment Option Evaluation Form 79

APPENDIX 2: Investment Committee Meeting Minutes 81

APPENDIX 3: Fiduciary Acknowledgment Letter 83

APPENDIX 4: By–laws and Operating Procedures for the Investment Committee 85

APPENDIX 5: Fiduciary Audit Checklist 91

APPENDIX 6: Glossary 95

APPENDIX 7: Resources 107

Rocco DiBruno, AIFA®, CIMA®, is a managingdirector and director of the Thornburg Retirement Group atThornburg Investment Management. He has over thirty years′experience working with financial advisors and plan sponsors in theretirement plan sales, consulting, marketing, and productdevelopment. Rocco received his Certified Investment ManagementAnalyst® (CIMA) designation from the Investment ManagementConsultants Association and his Accredited Investment FiduciaryAnalyst® (AIFA) designation from the Center for FiduciaryStudies. He is also a frequent industry speaker on retirementindustry trends and fiduciary governance.