The committee must consider the purpose of the plan and time horizon for investors when creating an asset allocation strategy.

After the investments have been vetted, committee members should vote on the selections and document their decision process in the event decisions are questioned in the future. Meeting minutes should be kept to demonstrate how the committee arrived at its decisions.

Investment committees must have a clear understanding of the costs of running their plans. This includes the cost of administration, recordkeeping and the investments selected. This requires knowledge of the differences in share classes and revenue sharing arrangements of different share classes. It also requires committees to interpret fee disclosure reports from their providers and to benchmark total plan expenses against those of other comparable plans.

Investment committees need to hold regular meetings, ideally more than once a year, in order to keep a close eye on the performance of the investments they are overseeing. To effectively monitor their programs, investment committees must have guidelines for measuring performance against indices and peers.

Conflicts of interest between members of the investment committee and service providers should be avoided, but at a minimum must be disclosed and monitored. A good practice is to ask each member of the committee to sign an affidavit regarding any conflicts they may have. This will be good documentation in the event questions arise later about relationships between plan fiduciaries and related service providers.