Investment committees play a central role in the long-term financial health of institutions. For endowments, foundations, and other mission-driven entities, the committee is where mission, governance, risk management, and investment strategy come together.

After participating in more than 3,000 investment committee meetings over the past 30 years, I have come to believe that effective committees share a common set of traits. Although each committee has its own distinguishing characteristics, the most effective operate with similar discipline.

Here are five traits I have observed across high-performing investment committees:

1. Implementing Best Practices: The Chair’s Role

Every investment committee has a distinct personality, and the chair plays a major role in shaping it.

Investment decisions are not made on data alone. Psychology, group dynamics, fear, confidence, and peer pressure all enter the room. Benjamin Graham famously said investment management is most intelligent when it is “businesslike.” The best chair helps to create a rational environment.

Every committee has to answer two questions: Are we investors or traders? Is our time horizon long-term or short-term? The chair sets the tone.

This role is especially important during market stress. During the Global Financial Crisis, one committee chair, a public company CEO, acknowledged that his company’s stock had fallen more than 30%, but emphasized that its long-term earnings power remained intact. He applied the same perspective to the endowment: short-term prices had changed, but the portfolio’s long-term purpose and potential had not.

That kind of leadership matters. Strong chairs do not need to dominate the room. They ask discerning questions, encourage participation, manage the agenda, and keep the committee anchored to its long-term responsibilities.

The chair’s most important job is not to have all the answers. It is to create the conditions for the committee to make better decisions.

2. Active Engagement: A Key Investment Committee Responsibility

High-performing committees are made up of engaged trustees who take the work seriously. They attend meetings prepared, ask thoughtful questions, and follow through on prior discussions.

Investment expertise is valuable, particularly for larger or more complex portfolios. But not every effective trustee needs to be an investment professional. Some of the best committee members bring other forms of judgment such as operational experience, mission alignment, and a commitment to preparation.

In one case, a retired nun serving on the committee of a large endowment never missed a meeting. She was not an investment professional, but she read the materials carefully, asked smart questions, remembered prior decisions, and brought consistency and accountability to the discussion. She was highly effective because she was fully engaged.

The most effective committees operate as teams, developing shared language, goals, and trust that allow healthy dissent. That cohesion deepens over time and across market cycles.

3. A Disciplined Decision-Making Process

A longstanding client once told me, “I am not here to forecast interest rates or predict the next move in the stock market. I am here to manage a process.”

That is one of the clearest descriptions of effective committee work I have heard.

Markets create a constant stream of temptation. When markets are rising and a portfolio is lagging peers, committees may feel pressure to abandon the playbook and chase what is working. When markets are falling, the temptation is often the opposite: capitulate, reduce risk, and seek safety at precisely the wrong moment.

Both environments test discipline.

Recent years have underscored the difficulty of market timing. Despite a pandemic, inflation, rising rates, geopolitical conflict, and banking stress, the S&P 500 delivered a strong annualized return over the five years ending December 31, 2025, illustrating the cost of making allocation decisions based on short-term fear.

Strategic asset allocation provides structure amid uncertainty. Because the future is unknowable, high-performing committees rely on diversification, policy, and process rather than prediction.

The best committees do not need perfect forecasts. They need a process they can trust.

4. Governance: Strengthening Investment Committee Oversight

In investing, problems often arise not from bad ideas, but from good ones taken too far.

This is especially important when an investment idea becomes widely accepted or fashionable. Private equity, as a recent example, can strengthen long-term portfolios but oversized allocations may compromise liquidity and risk management.

The strongest committees use governance structures and disciplined investment committee oversight that increase rigor. They create healthy tension among internal staff, the investment committee, and outside advisors. This “three-legged stool” approach can make it harder for new ideas to enter the portfolio quickly, but that is often a strength. It forces better underwriting, more debate, and clearer alignment with the institution’s objectives.

Good governance does not mean slowing everything down unnecessarily. It means ensuring that major decisions are tested from multiple angles including defining the problem and conditions for success.

Committees with strong governance are less likely to follow the crowd simply because peers are doing something different. They are also better equipped to distinguish between innovation and momentum.

5. Success is Clearly Defined Up Front

Every investment committee has multiple objectives, many of which compete with one another. The best committees define success before markets test them.

A portfolio designed to maximize long-term returns or mirror peer endowments may not suit a hospital, foundation, or other institution with near-term liquidity needs, credit-rating constraints, or a different risk profile.

One hospital client prioritized maintaining a premium bond rating above all else. As many institutions faced pressure to increase private equity allocations, the CFO reminded the committee, “We are a hospital, not a university endowment.” That reminder kept the committee focused on supporting the hospital’s mission rather than outperforming endowments with different objectives.

When pressure builds, committees should return to first principles: Does the IPS still align with the institution’s mission and needs? An annual review of the Investment Policy Statement helps committees reaffirm what success means and guards against strategy drift.

Successful committees define success for themselves before markets, peers, or headlines define it for them.

The Common Thread: Discipline Over Prediction

These best practices all share a common thread. The best investment committees do not succeed because they can forecast every market cycle. They succeed because they understand their roles and responsibilities.

They combine thoughtful leadership, active engagement, disciplined processes, strong governance, and clearly defined objectives.

Markets will always bring new trends, risks, and peer pressures. High-performing committees are not immune to those pressures, but they are better prepared to navigate them.

In the end, effective committee governance is not about reacting faster. It is about deciding better.

About the Author

Patrick Sullivan, J.D., is a Senior Managing Director at Monticello Associates, where he advises foundations, endowments, and family offices on investment strategy and governance. He joined the firm in 2003, founded and leads its Cleveland office, and serves on the firm’s Management Committee and Manager Review Committee.

About Monticello Associates

Through Monticello Associates, its boutique institutional consulting business, Cresset helps sophisticated organizations and families build investment programs designed to support enduring missions, multigenerational priorities, and long-term financial strength. With more than three decades of consulting experience, Monticello advises on $132+ billion in AUA across approximately 170 client relationships (as of 12/31/2025).

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