Pepper International works with families and trustees to ensure their investment portfolios are being managed correctly and optimally. The level of supervision required is forged though the expertise, knowledge and the range of services that Pepper International provides.

Current Environment for families and trustees
Market volatility is a major concern for many families and for professional trustees who are charged with the fiduciary responsibility for safeguarding trust assets. Recent trust legislation enacted has introduced a statutory “duty of care” on trustees creating concerns for them as to how to implement that requisite level of duty of care and supervision. Trustees in the main do not have sufficient investment knowledge to mitigate their risk exposure to acceptable levels and with litigation involving trustees having seen a marked increase in recent years, it has become essential to have a robust supervisory framework in place. Furthermore, multi-generational family trusts bring added complications and conflicting demands on trustees and today’s range of investment products and services is much more varied and complex than a generation ago, thereby further adding to the trustees’ challenging environment.

Basic Considerations and Essential Ingredients
•    Have the trustees drawn up a clear and articulate investment policy for the trust?
•    Does the investment policy address topics such as: capital growth, income requirements, capital preservation and the requisite time horizon?
•    Is there a significant sum of unmanaged assets and what is the reason for this?
•    Are there conflicting requirements or pressures from the trust beneficiaries? If so, how are these resolved / managed?
•    How have the trustees addressed taxation issues that might confront the trust’s interested parties?
•    Is there an ingrained conflict with the aspirations of the family and the risk appetite of the trustees – and what measures are in place to overcome / mitigate this?
•    How often is the policy reviewed / revised in conjunction with the family and professional advisors?
•    Is the trust fund available for investment divided amongst more than one manager? What are the grounds for so doing; are the managers compared; is there a practice to remove the weakest manager?
•    How are new managers evaluated; how is their track record assessed; how do they levy fees and how transparent are these?
•    How often are the investment parameters checked for compliance with the mandate and how is this exercise undertaken. Is the exercise effective?
•    What are the benchmarks used for the portfolio; are they appropriate; what action is taken when performance falls short versus the benchmark?
•    Are clear audit trails maintained documenting the actions taken and by whom?
•    Should non-bankable assets (e.g. property, yachts, holdings in family operating companies) be included in the policy / performance assessment?

Performance Measurement and Reviews
Once investments have been made, it becomes critical to measure the performance of each on a monthly basis against the correct benchmark. Pepper International helps to set the right benchmarks for familiesand trustees and then constructs an overall customized benchmark to measure the entire portfolio against the right index. To learn more, please Request a Trust Investment Review.