The Trustee Governance Guide

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. 

Based on more than a decade of research, practice, and discussions with many key decision makers and influencers across the industry, this book addresses the many topics related to better governance, greater mission-driven financial performance, and impact. The questions the book addresses include: 

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

·         How much knowledge is necessary to be a competent board member?

·         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.

“Trustees in the modern world are faced with an ever-changing investment environment. Now more than ever a guide to governance is essential reading. This book is structured in a very simple, intuitive fashion to help trustees easily research topics that may challenge them during the discharge of their responsibilities.” (Paul H. Smith, President & CEO, CFA Institute) 

“This book provides a thorough, accessible, and practical guide for trustees and staff that have the honor and the responsibility of stewarding long-term capital for a non-profit institution or pension.  The authors Christopher Merker and Sarah Peck advance the investment governance field by making an informed and strong case for understanding ESG as a risk management issue and by introducing a Fiduciary Effectiveness Quotient assessment tool. Investment stewards that want to understand and follow best practices will benefit from reading this book.” (Cathleen M. Rittereiser, Executive Director ofCommonfund Institute and co-author of Foundation and Endowment Investing) 

“Finally, a book that demonstrates empirically what many practitioners have long believed to be true: board governance can significantly enhance investment returns.  The authors also outline the key attributes of a superior governance structure. This book should be required reading for all trustees and trust executives.” (James Wilbanks, Executive Director, Mendocino County Employees Retirement Association)

“Any book that starts with a first imperative to be well governed has my attention. In this book, Chris and Sarah have introduced important findings on the value of good governance to investment success. At the same time, they have crafted a reader-friendly handbook for fiduciaries covering important topics such as human behavior and the need to integrate environmental, social, and governance factors into portfolio thinking. Trustees will find some helpful pointers here.” (Tim Mitchell, Global Head of Governance Consulting, Willis Towers Watson)

“Chris and Sarah’s work provides much-needed empirical evidence of the relationship between governance factors and financial success. More importantly, they lay out a practical framework to help fiduciaries design, evaluate, and maintain a successful governance model. This book is a worthwhile read for anyone serving in a fiduciary capacity.” (Gregory C. Allen, CEO and Chief Research Officer, Callan LLC)

“With this book, Merker and Peck put forth a highly useful guide for both board members and those with an interest in coaching boards to achieve better financial outcomes for their organizations. Their thoughtful and focused work lays out practical approaches for avoiding the myriad impediments, which can prevent successful governance and institutional investing. Their prescriptions are concise, interesting and actionable—this should be a must read for investment committee heads nationwide. Bravo.” (Sterling Shea, Global Head of Wealth & Asset Management, Dow Jones)

“Everywhere we look, fiduciary duties, norms, standards, and processes continue to receive heightened scrutiny in the wake of the last financial crisis and the worldwide growth of socially responsible investing strategies. This book offers a timely, understandable, enlightening, and critically important discussion of the importance of fiduciaries to investment performance and the role of governance in driving fiduciary quality complete with useful tips and tactics for practitioners in finance.” (John Taft, Vice Chairman, Baird)

“This book puts the ‘G’ in Environmental, Social and Governance factors to impact investing. ESG is not a trend, it is a mega trend— and for good reason. As Merker and Peck prove, an ESG approach to management and governance adds value to sponsors, participants and to society. It is incumbent upon fiduciaries to understand the implications and process behind this win/win/win approach to portfolio management. Thought provoking and full of compelling data, The Trustee Governance Guide is an approachable and actionable book for trustees and fiduciaries of any skill level to understand the potential benefits of sustainable investing and governance.” (Tom Anderson, Former Executive Director of Morgan Stanley Wealth Management; Author of The Value of Debt series; Executive Chairman of Supernova Companies)

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.