The Trustee Governance Guide

Christopher K. Merker is a Financial Advisor and a Director of Private Asset Management at Robert W. Baird & Co. Incorporated, where he provides advice and guidance to the boards and investment committees of institutional investors. He holds a PhD in investment governance and fiduciary effectiveness from Marquette University. He is past president of the CFA Society Milwaukee, and a founder and current board member of the CFA Society Milwaukee Foundation, a sister organization dedicated to promoting financial literacy. An adjunct professor of finance at Marquette University where he teaches the investment course Sustainable Finance, he is also executive director of Fund Governance Analytics, a provider of environmental, social, and governance (ESG) research and diagnostic tools for asset owners and institutional investors. He publishes Sustainable Finance, which covers current topics around governance and sustainability in investing.

Sarah W.Peck is an Associate Professor of Finance at Marquette University. Sarah earned her undergraduate degree from Yale University and a PhD from the University of Rochester. She has spent two decades researching topics in corporate governance with a focus on the board of directors publishing in The Journal of Financial Economics, The Journal of Corporate Finance, The Journal of Forensic Accounting, among others. She is director of research at Fund Governance Analytics, where she leads research into environmental, social, and governance (ESG) factors. She wrote the book Investment Ethics (2010) and pioneered an investment ethics course for CFA® educational partners. Following the 2006 pension scandal, she joined the Milwaukee County Pension board where she served as a trustee and chair of the Investment Committee for seven years.  She regularly participates in panel discussions with trustees of pension funds and endowments on topics around integration of ESG into investment strategies.

More than 80% of the financial assets in the United States fall under the purview of a trustee. That's a big responsibility for an estimated 1% (around 1.5 million people) of the U.S. working population charged with overseeing investments for millions and millions of beneficiaries, public sector, and non-profit organizations. In a world proliferated by investment products, increasingly dominated by indexes, faced-particularly in the pension world-with increasing liabilities, more regulation, and a growing number of social and sustainability objectives, what's a trustee to do?

The Trustee Governance Guide is here to help guide today's board trustee through the brave new world of 21st century investing. The book focuses on the critical aspects of the Five Imperatives: Governance, Knowledge, Diversification, Discipline, and Impact. 

·         What is good governance, how do we know it when we see it, and why does it matter?

·         How big should my endowment be?

·         What are the key elements of a diversified portfolio?

·         How much does cost matter?

·         What's the difference between socially responsible and ESG investing?

·         Can I focus on sustainability and still be a good fiduciary?

This book provides a way for boards to improve and benchmark their own governance performance alongside their peers, and uniquely covers related investment topics in each chapter.

1. Introduction.- Part I The First Imperative: Be Well-Governed.- 2. Crisis.- 3. Fiduciary Duty.- 4. Good Governance.- Part II The Second Imperative: Be Knowledgeable and Beware of Common Errors.- 5. Human Error and Behavioral Finance.- 6. Knowledge Not Just for Knowledge's Sake.- 7. Origins of Financial Illiteracy.- Part III The Third Imperative: Be Diversified.- 8. 30,000 Products.- 9. Theory Time.- 10. Over-Diversification.- Part IV The Fourth Imperative: Be Disciplined and Control Costs.- 11. The Active Versus Passive Debate.- 12. Active Versus Passive: The Evidence.- 13. Cost Savings and What Really Matters.- Part V The Fifth Imperative: Be Impactful.- 14. Farewell to Uncle Milt.- 15. ESG Challenges.- 16. Ok, We've Bought In...Now What?.