The Trustees’ responsibilities start with consideration to what the trust objectives are in line with the beneficiaries needs, therefore identifying a suitable investment strategy and solution.
The easy option may be leaving monies in bank accounts, where deemed to be without risk. However, leaving monies in low interest-bearing deposit accounts means that inflation is eroding the capital’s real value over the years. Hence while a cash management solution fits shorter term funds, capital to remain invested over the medium to longer term will generally require an alternative investment strategy.
If the charity has investments, it should have a written policy that sets out what it is aiming to achieve. The policy should be signed off by trustees and reviewed on a regular basis.
If using an investment manager then, by law, the trust must also have a legal agreement with them.The trustees have overall responsibility for the investments of their charities funds and should sign off and keep oversight of the investment policy.
Determining the right investment policy will take time and thought on the part of the finance team and trustees.
The investment policy should be consistent with the charities other policies, in particular risk and reserves, which together will help deliver the charities overall strategy.
Although trustees do not need to have specialist knowledge themselves, if there are significant funds involved they may want to consider appointing a trustee with specialist knowledge to the board.
Getting your internal governance arrangements right, both developing your policy and managing your investments is critical. It could be delegated to a small group who put together the policy for review and confirmation by the Trustee Board.
The role of the financial adviser includes working with Trustees establishing risk parameters in line with the trust objectives, identifying suitable solutions, while considering tax planning.
At Dodd Wealthcare, as independent financial advisers, we help many trust clients with both cash management solutions as well as selecting investment manager options and work with Trustees to ensure suitability on an on-going basis.
Contact Ainslie on 01228 530913 or email Ainslie@doddwealthcare.co.uk for more information.
Dodd Wealthcare Limited is an appointed representative of Network Direct Limited, which is authorised and Regulated by the Financial Conduct Authority.