The famous coach Vince Lombardi once pulled his professional players aside and said, “This is a football.” In a similar light, I thought it might be helpful to share some basic insights on choosing an investment adviser.

Billions of dollars in nonprofit funds are the responsibility of board members who often have no professional background in investment management. They do, however, represent the residents, employees and bondholders in deciding how the funds are to be managed. With or without investment experience, they are the people who review the proposals prepared by investment advisors. The final selection rests with their collective judgment.Nonprofit senior living organizations usually issue a “request for proposal” every three or four years to manage investments. The field of responses is narrowed to two or three advisers, who then present their capabilities to the finance committee. The final cut is subjective.

Rarely is the adviser chosen based on fees or investment performance, as these factors are usually very competitive to market benchmarks. Decision-making is usually collegial, with the winning advisor appealing to a broad cross-section of the finance committee.

The finance committee often includes a local banker, attorney, a person with financial background in private industry, a professor, a small business owner, the CFO and the CEO. The committee looks for reasons to eliminate a firm, since all the RFPs might look substantively similar.

The advisory firms should be somewhat familiar with the nonprofit investment policies and be capable of monitoring compliance with them. Some advisers use words like “unique” and “proprietary” but the recommended portfolio contains 90% of the same investments as other advisers.

Finance committees, just like  football coaches, are more successful in selecting advisers when they get down to basic communication skills.


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.