What is next in the investment arena? It’s what is always next: Uncertainty! You must do more as a chief financial officer than plan for the future; you must work with your investment adviser to prepare for several possible scenarios.

While outperforming the benchmark is nice, as Jerry Goss of research house Dorsey and Wright says, “It is no longer as important as protecting the downside. Now it is all about not losing money.”

As I speak with and meet CFOs every week, I am constantly amazed at how many are not working with an investment adviser. Have we lost sight of how important the investments are for funding the long-term mission of caring for seniors? Now is a great time to review conflicts of interest and investment advisory services, and prepare for the next downturn.

One nonprofit I spoke with recently uses two investment advisers (from two banks) for a pool of assets under $10 million. Both advisers recommended their own in-house or mutual funds as investments. Will the in-house manager ever be fired for poor performance? Even with potential conflicts of interest being corrected and fee savings in the tens of thousands of dollars, the investment committee voted to stay with the current situation! How many more millions must such an organization lose ($2 million last year) in performance and fees before management makes a change?

This example highlights the need for an independent investment adviser. Such an adviser helps the CFO with the responsibility and management of investments. Any potential conflicts of interest are identified and eliminated by using a well-written investment policy statement. Auditors and the new IRS 990 forms require nonprofits to exercise independence from any conflicts of interest in managing investments.

The market is highly leveraged and market corrections are routine. Work with an investment adviser, who, like the CFO, is a fiduciary and committed to the successful investment of the portfolio.


William C. Fisher is president of Investment Advisory Group LLC, a business development company partnering with some of America’s leading financial companies to provide independent financial services to nonprofit organizations.