Read an exclusive excerpt from The Investment Committee Guide to Prudence by Jonathan J. Woolverton, CFA

Today we have an exclusive excerpt from The Investment Committee Guide to Prudence by Jonathan J. Woolverton. Be sure to follow the tour for even more! And best of luck entering the giveaway.

JJ’s investment career spans more than five decades. He has been the chief investment strategist for a pension plan sponsor, a managing director and senior consultant within a global investment planning consultant firm, and a managing director and chief operating officer of an investment management organization. Over his career, JJ has attended well over a thousand investment committee meetings as a plan sponsor, a consultant, and a money manager. In the majority of these meetings, he has found that committee members lack three things: in-depth investment expertise to effectively carry out their fiduciary responsibilities, the necessary time allocation to administer and manage the investment program in the best interests of the beneficiaries, and the ability to develop an efficient monitoring system to hold all service providers accountable for the products and services they provide.

This book outlines the steps to be taken in establishing investment policy; formulating asset mix strategy; creating an appropriate investment management structure; undertaking investment manager searches; and highlighting the conflicts of interest, biases, and self-interests of the various service providers.

This book is designed to assist members of investment committees in their role as fiduciaries/trustees/administrators.

Read an exclusive excerpt:

To provide investment committee members with a foundation for how plan assets should be administered and managed, it is necessary to outline the beliefs of the plan sponsor and, therefore, for members who must form consensus around these beliefs. Stated beliefs, derived from reliable evidence and rational arguments beyond general “motherhood-type” statements, provide a visible and viable basis for the investment committee’s decision-making processes.

When setting out these investment beliefs, three main issues should be considered:

1. the longer-term timeframe of a pension plan must provide higher confidence that future investment returns will reflect the historical 

features of the trade-off between return and risk;

2. asset mix policy should be the main determinant of both return and risk—both ex-post and ex-ante; and,

3. appropriate diversification should be considered the only “free lunch” owing to its role of reducing risk in pursuing required 
returns or, on the other side of the coin, of enhancing expected returns at a tolerable level of risk.

As well, the plan sponsor must determine whether to have the investment funds managed internally or externally—or some balance of the two. 

The decision is typically made based on two main factors: 1) the size of the assets within the fund; and 2) the business nature of the plan sponsor. Economies of scale may enable mega funds to internally manage some or all of these investment functions at significantly lower costs, yet with comparable success to that of external providers. Plan sponsors that themselves specialize in delivering money management services may elect to leverage their operational skills by managing their funds internally.

Besides better pricing, some of the commonly recognized advantages of internally managed funds are:

• greater control over the investment strategy, investment selection, and implementation;

• greater risk-management control;

• a more in-depth understanding of the decision-making process, as it can be custom designed to meet the specific goals and objectives of the fund;

• full-time attention to singular or smaller numbers of portfolios;

• potentially, lower trading costs; and,

• more effective operating controls, monitoring, and evaluation criteria.

Meanwhile, the advantages of having the fund assets externally managed include:

• greater access to more expert resources to execute and support the decision-making process;

• the ability to provide for greater diversification by asset class, investment approach, and investment style; and,

• greater flexibility to add or eliminate money managers from the investment management structure.









Jonathan J. Woolverton, CFA, has spent his whole career in the investment field—over fifty years. After graduating from university in Pennsylvania, he moved to Toronto, Canada, where he began his career in the investment department of an insurance company. In his role as investment officer he was responsible for formulating investment strategy and overseeing all investments within the equity and fixed-income divisions. JJ later joined Ontario Hydro as their chief investment strategist where all pension funds were managed internally. 

JJ left the money management business to become an investment planning consultant. He was a founding partner and managing director of Frank Russell Canada. He moved back to the money management side as the managing director and chief operating officer of Guardian Capital Inc. JJ graduated from Westminster College with a BBA and achieved his Chartered Financial Analyst certification. JJ has published numerous articles on the pension and investment industries and has been the keynote speaker at many conferences and seminars.

CONNECT WITH Jonathan J. Woolverton

WEBSITE – Jonathan J. Woolverton, CFA – Author Website (

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Jonathan J. Woolverton, CFA will be awarding a $15 Amazon or B/N GC to a randomly drawn winner via rafflecopter during the tour.

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