The role of trustees
Somerset West – A board of trustees must work collectively, but also be independent of thought, according to management consultant Steve Dold.
He was one of the speakers at a conference on retirement planning hosted by the Financial Planning Institute (FPI) at the Lord Charles Hotel in Somerset West on Tuesday.
“Remember, the board is ultimately responsible. And it is not only about compliance. When electing trustees, make sure you are not just electing someone you and the others like. Elect someone who can think independently and stand up for his or her opinions,” explained Dold.
Another important factor for him is that a board must be balanced.
“Trustees must ensure the rules are complied with. So you are responsible to appoint competent people. If something goes wrong, you have to be able to show you have applied your mind,” said Dold. “Being a good corporate citizen has become very important.”
Integrity is another important aspect when it comes to trustees.
“Integrity is the moral fibre, the ethos an organisation is driven by. The principles of governance ethics do not only involve being a good corporate citizen, it also involves realising your full potential as an individual serving on a board and as a part of the community,” cautioned Dold.
“Make sure benefits of a fund are optimised and get a balance in the fund.”
Transparency of outcomes to members is another important aspect.
“Always be focused on the outcome of the fund. A stable retirement is the purpose. Obtain professional skills where you need to. Remember, the difference between ethics and morality is the difference between telling the difference between ‘right and right’,” he added.
The example he gave was when the best product for your client might be Product A, while the highest commission would be paid to you as adviser via Product E.
“You must make the right decision for your client. It takes 30 years to build your reputation and 30 seconds to destroy it,” said Dold.
In his view, there are basically five ethical duties for trustees, namely to have a conscience (including independence of mind); integrity; competence; commitment (including a willingness to put in time); and conviction, so that conformance and performance are always balanced.
“Being a trustee is not the same as being the fundraising committee of the church bazaar,” said Dold. “It is about responsible investing and the way you approach the business, considering the long term stability of the market and getting an acceptable return on investment.”