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Advisor Education

7 best practices of effective investment committees

James Bergeron, J.D.
Managing Director, Advisor Education
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While the standards for financial professionals continue to rise, investment committees have become increasingly important as teams look for scalable ways that embrace structure and accountability to inform sound decision-making. In addition to helping satisfy regulatory requirements, an investment committee can also provide an added level of credibility to your clients and prospects. Earning and maintaining trust is one of the most crucial aspects of the client relationship. An investment committee can serve as a powerful tool to building credibility and trust through communicating the value of a disciplined approach to investing. 

While there is no one-size-fits-all structure, there are several best practices that can help ensure a successful committee approach:

1. Utilize a committee charter

2. Ensure an investment policy is in place with clearly stated goals

3. Make committee members aware of their responsibilities

4. Build a committee of proper size

5. Consider the impact of diverse thought

6. Distribute a thoughtful meeting agenda in advance

7. Proactively address efficiency obstacles in planning

Overcoming efficiency obstacles
Obstacle Preventive Action
Group Think
Conforming to a group thought process in order to minimize conflict and/or avoid critical evaluation. Recruit a diverse committee.

Ensure time for independent evaluation prior to meetings.
Confirmation Bias
Filtering new information or evidence in a way that confirms preexisting opinions and beliefs. Encourage questioning and exploring thoughts and beliefs without judgment.

Provide access to an unbiased third party view.
Overconfidence Bias
Overestimating our talents and abilities. Play devil’s advocate and respectfully challenge one another.

Consider the risks before making a decision.
Herding Bias
Rationalizing a course of action is the right one because everybody else is doing it. Take time in making decisions.

Make a conscious effort to form a unique validated opinion.
Action Bias Favoring action over inaction, often to our benefit. Evaluate the pros and cons of each possible response outcome.

Give equal consideration to both action and inaction.

If you have questions or would like to explore how Nuveen can further support your efforts to grow your business, reach out to your Advisor Consultant or call 800.221.9271.

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The views and opinions expressed are for informational and educational purposes only as of the date of production/writing and may change without notice at any time based on numerous factors, such as market, economic or other conditions, legal and regulatory developments, additional risks and uncertainties and may not come to pass. This report contains no investment recommendations and should not be construed as specific tax, legal, financial planning or investment advice. This material may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections, forecasts, estimates of yields and/or market returns, and proposed or expected portfolio composition. Moreover, certain historical performance information of other investment vehicles or composite accounts managed by Nuveen may be included in this material and such performance information is presented by way of example only. No representation is made that the performance presented will be achieved, or that every assumption made in achieving, calculating or presenting either the forward‑looking information or the historical performance information herein has been considered or stated in preparing this material. Any changes to assumptions that may have been made in preparing this material could have a material impact on any of the data and/or information presented herein by way of example.

The information provided does not take into account the specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on an investor's objectives and circumstances and in consultation with their advisors.

This material is not intended to be relied upon as a forecast, research, a recommendation or investment advice, and does not constitute an offer or solicitation to buy or sell any securities or to adopt any investment strategy, and is not provided in a fiduciary capacity. The information and opinions contained in this material are derived from proprietary and non‑proprietary sources believed to be reliable, but not necessarily all‑inclusive and its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.

There is no guarantee that any forecasts made will come to pass. Company name is only for explanatory purposes and does not constitute as investment advice and is subject to change. Any investments named within this material may not necessarily be held in any funds/accounts managed by Nuveen. Reliance upon information in this material is at the sole discretion of the reader. Views of the author may not necessarily reflect the views of Nuveen as a whole or any part thereof.

For term definitions and index descriptions, please access the glossary on nuveen.com. Please note, it is not possible to invest directly in an index. Performance data shown represents past performance and does not predict or guarantee future results. Investing involves risk; principal loss is possible.

Important information on risk

Past performance is no guarantee of future results. All investments carry a certain degree of risk, including the possible loss of principal, and there is no assurance that an investment will provide positive performance over any period of time. Certain products and services may not be available to all entities or persons. There is no guarantee that strategy’s investment objectives will be achieved.

Economic and market forecasts are subject to uncertainty and may change based on varying market conditions, political and economic developments. This report should not be regarded by the recipients as a substitute for the exercise of their own judgment. It is important to review your investment objectives, risk tolerance and liquidity needs before choosing an investment style or manager.

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