Governing other people’s money
Fiduciaries do not need to become portfolio managers. They do need to know which investment decisions they own, which they have delegated, and how the evidence shows that beneficiary purpose is being served.
By Professor Emeritus Michael Drew FGIA FCG and Dr Adam Walk FGIA FCG, Drew, Walk & Co.
John Kay’s Other People’s Money is a useful reminder that finance should serve households, businesses, and institutions, not turn inwards on itself.1 For fiduciaries, the phrase is not merely a critique of finance. It is the job description.
Investment governance is not the search for the cleverest portfolio. It is the disciplined use of people, policies, processes, and systems to address an investment challenge on behalf of beneficiaries.2 The practical task is to decide what must be governed, what may be delegated, and what evidence would show that the arrangement remains fit for purpose.
Most fiduciaries come to the investment table for reasons other than portfolio construction. They are appointed because they are directors, trustees, committee members, executives, representatives of a stakeholder group, custodians of a mission, or stewards of a family, charitable, or public purpose. Yet they are expected to oversee markets, managers, products, benchmarks, sustainability claims, liquidity terms, and, increasingly, highly technical private market exposures.
That can make the role appear more mysterious than it should. A fiduciary need not be a chief investment officer by another name. The better question is not whether a board member can price a credit instrument or forecast the next move in interest rates. It is whether the fiduciary body has organised itself, so the right decisions are made by the right people, with the right resources, in the interests of the right beneficiaries.
In Australia, this question is especially practical. Superannuation assets were around $4.5 trillion in December 2025, with APRA-regulated funds managing around $3.2 trillion.3 The same fiduciary discipline matters for charities, universities, schools, religious institutions, public purpose funds, insurers, private ancillary funds, and family offices. The legal forms differ, but the underlying problem is familiar: someone is governing other people’s money.
APRA’s Prudential Standard SPS 530 puts the point firmly for registrable superannuation entity licensees: the board is ultimately responsible for the establishment, implementation, oversight, and maintenance of the investment governance framework.4 Non-superannuation fiduciaries may not be subject to that standard, but they can still learn from its logic. Investment governance should be scaled to the organisation’s size, complexity, and purpose, not copied from a larger institution or reduced to a template.
Begin with the destination
Investment committees often begin in the wrong place. They ask: what asset class should we add, which manager should we appoint, which benchmark should we use? These questions matter, but they are not the first questions.
The first question is: what investment challenge are we trying to solve?
For a superannuation trustee, the answer may differ by cohort. Accumulation members, members approaching retirement, and retired members have different time horizons, liquidity needs, and tolerances for income instability. The retirement income covenant makes that plain by requiring trustees to formulate a retirement income strategy for members who are retired or approaching retirement, addressing expected income, sustainability and stability of income, and flexible access to funds.5
For an endowment, the challenge may be sustaining distributions today without consuming tomorrow’s mission. For a school or university foundation, it may be protecting purchasing power while funding scholarships or capital works. For a family office or private ancillary fund, it may be reconciling family values, liquidity, philanthropy, and intergenerational stewardship.
If the destination is not clear, the portfolio cannot be judged. It may outperform a peer median and still fail the beneficiary. Conversely, a portfolio that looks dull against a fashionable benchmark may be doing precisely what the fiduciary asked of it.
Draw the fiduciary line
The most useful governance question we know is deceptively simple: who decides what, and who does what?
Large pools of capital require delegation. Smaller pools often require it even more, because the governing body will not possess all technical capabilities internally. Delegation is sensible. Abdication is not. The fiduciary line separates decisions that must remain with the governing body from decisions that may be delegated to management, advisers, investment managers, or service providers.
Above the line sit matters such as objectives, investment beliefs, risk appetite, policy, conflicts, resourcing, delegations, and oversight. Below the line sit implementation choices that are properly made within the authority and constraints set by the fiduciary body.
The line should be written down before a difficult event tests it. A market shock, a valuation dispute, a liquidity squeeze, a manager failure, or an adverse media story is a poor time to discover that no one is certain who had authority, who was monitoring the risk, or what should have been escalated.
A board or committee paper should therefore make delegation visible. It should show what decision is being asked of the fiduciary body, what has already been delegated, what advice has been received, what conflicts exist, and what would cause the matter to return to the board.
Make policy do work
The investment policy should not be a document that appears once a year for approval and then disappears into a portal. It should be a working agreement about how the fiduciary body intends to solve the investment challenge.
A useful policy explains the objective, the beliefs that guide decisions, the risk appetite, the permitted opportunity set, the role of liquidity, the reporting measures, the delegation structure, and the circumstances that require escalation. It should also say what the organisation will not do. That last discipline is valuable. Many governance failures begin with an investment that is technically permitted but not truly understood, not adequately resourced, or not connected to the purpose of the fund.
A policy written in plain language is not a lesser policy. It is usually a better one. If a reasonably diligent fiduciary cannot explain the policy, it will be difficult to show how the policy disciplines decision making.
Budget for the complexity you choose
There is nothing inherently wrong with investment complexity. Global diversification, unlisted assets, active management, currency management, derivatives, and sustainable investment approaches can all serve legitimate beneficiary purposes. The problem begins when the governance budget is not matched to the complexity of the investment challenge.
By governance budget, we mean time, talent, systems, advice, and attention. A simple portfolio may require a modest governance budget. A complex portfolio requires more. If the fiduciary body cannot explain, value, monitor, and exit an investment arrangement in a reasonably informed way, it should ask whether the expected benefit justifies the governance burden.
Australian fiduciaries are now being tested on this point. APRA’s review of unlisted asset valuation and liquidity risk management found that unlisted asset holdings are a critical issue for superannuation, with approximately $500 billion invested in unlisted assets at 30 June 2024.6 The lesson is broader than superannuation. Any fiduciary who approves illiquid or hard-to-value assets must also approve the valuation discipline, liquidity discipline, and reporting discipline needed to supervise them.
A similar point applies to sustainability and ethical investment claims. These are not merely marketing propositions. They are governance propositions. ASIC’s greenwashing actions show that claims about exclusions, screens, stewardship, or sustainability must be supported by investment processes that can actually deliver what has been promised.7
Reporting should answer one question
Investment reports often contain more data than decision-useful information. The question for fiduciaries is not whether every page is interesting. It is whether the report enables the governing body to answer a single question: are we on track?
A useful report connects the portfolio back to the investment objective. It distinguishes market noise from risks that threaten the purpose of the fund. It reports performance, but not only performance. It also reports liquidity, valuations, fees, tax, implementation costs, compliance with policy, conflicts, exceptions, decision quality, and whether prior board decisions had the intended effect.
This is where investment governance becomes practical. A fiduciary body should be able to look at its reporting pack and see the chain from beneficiary purpose to objective, from objective to policy, from policy to portfolio, and from portfolio to evidence. Where that chain is broken, the solution is rarely another dashboard. It is usually a better question.
Points for reflection
For those who are time poor, the following questions are a useful starting point:
- Can we state the investment challenge in one sentence from the beneficiary’s perspective?
- Have we agreed which decisions sit above the fiduciary line and which may be delegated?
- Does our governance budget match the complexity of the portfolio we have chosen?
- Would a new director or trustee understand from our papers why we own what we own?
- Can we explain our sustainability, valuation, and liquidity arrangements without relying on slogans?
- Does our reporting show whether we are on track, or merely what happened last month?
Good investment governance does not guarantee good investment outcomes. Markets will still surprise us. Managers will still disappoint us. Some risks will be rewarded and others will not. What good governance can do is create the conditions for fiduciaries to act with discipline, clarity, and prudence before the outcome is known.
That is the work. Not paperwork around investing, but the organised exercise of judgment over other people’s money.
References and notes
- John Kay, Other People’s Money: Masters of the Universe or Servants of the People?, Profile Books, 2015.
- Michael E. Drew and Adam N. Walk, Investment Governance for Fiduciaries, CFA Institute Research Foundation, 2019.
- APRA, Quarterly Superannuation Performance Statistics, December 2025.
- APRA, Prudential Standard SPS 530 Investment Governance, effective 1 January 2023.
- APRA and ASIC, 2025 Pulse Check on Retirement Income Covenant implementation, November 2025.
- APRA, Governance of unlisted asset valuation and liquidity risk management in superannuation, December 2024.
- ASIC media release 25-042MR, Active Super ordered to pay $10.5 million penalty in ASIC’s third greenwashing court action, 18 March 2025.
The Authors
Dr Michael Drew FGIA FCG is Co-Founder and Director of Drew, Walk & Co. and Professor Emeritus of Finance at Griffith University. He is a financial economist specialising in investment governance, pension finance, and outcome-oriented investing. Michael holds a PhD in economics from the University of Queensland and a DPhil in financial geography from the University of Oxford.
Dr Adam Walk FGIA FCG is Co-Founder and Director of Drew, Walk & Co. and a financial economist with experience across investment, governance, and risk management. He is also a company director and trustee with several for-purpose institutions. Adam holds a PhD in financial economics from Griffith University.