Trustee-directed Portfolios

In certain instances, some retirement plans do not, or should not, permit participant direction. Instead, all assets are invested within a commingled portfolio and each participant earns the same rate of return. This would be called a trustee-directed portfolio. The portfolios of other types of trusts or those of foundations cannot be participant-directed for the obvious reason there are no participants. These portfolios are also trustee-directed.

NWCM prefers to manage trustee-directed portfolios on a discretionary basis. The advantages to a trustee are:

1. Substantial relief of fiduciary liability by statute under ERISA 405(d)(1) or by common law largely based on case law arising from the Third Restatement of Trusts;
2. More responsive day-to-day management vs. management that occurs only after a trustee meeting; and
3. A focus on the review of investment decisions with the benefit of 20/20 hindsight vs. making decisions with an uncertain outcome.

At the client's request, NWCM can provide non-discretionary investment consulting to trustee-directed portfolios.

Committee Education