Governance and Oversight
Complete Scope of Governance & Oversight
When properly implemented, a governance operating model defines the mechanisms and interaction points by which oversight will be implemented across a firm. An effective model supports the processes and points of oversight across the organization’s business lines, departments and people. The aim here is proactive protection. We highlighted that best practices in governance and oversight include proper trading, staffing, compliance, and vendor due diligence… but CIG has found that an effective governance operating model consists of some broader components.
- Culture: Enables the behaviors and activities needed for effective governance by establishing: core values, continuous improvement, business operating principles, performance measurement and management, leadership and employee talent development programs.
- Responsibilities: Defines specific oversight activities and obligations: compliance department, investment management committee, risk management committee, leadership and employees.
- Infrastructure: Provides a governance framework for consistent scalable day-to-day operations: policies and procedures, measures and metrics, IT and communications support, reporting structure, committee structure, and control.
CIG Compliance Department
The function of the Compliance Department is to monitor the day-to-day sales functions of the firm and routinely test compliance procedures, so as to help avoid the risk associated with violations of securities regulations and state laws. The Department seeks to identify areas of risk, document such findings, implement effective written procedures, and resolve issues that are uncovered as part of a comprehensive program. The Department strives to instill a “culture of compliance” throughout the firm by continuous training and communications with company staff.
CIG Asset Management works in conjunction with CIG Wealth Management and is guided by two over-arching CIG committees:
CIG Investment Committee
Committee Overview: The Investment Committee meets bi-weekly and is made up of the firm’s Managing Principal, Chief Operating Officer, and members of the Asset Management Department.
Committee Objective: The Investment Committee’s primary objective is to establish and maintain the firm’s overall investment policy and to carry out the firm’s investment management process.
Operations: The Committee is designed to approve and manage the firm’s investment decision making process. The committee provides an open forum for the free exchange of ideas and suggestions and has been empowered to establish a formal process which is used for the ongoing management of the firm’s investment strategy. The firm’s investment management process consists of:
- Creating CIG’s Investment Philosophy
- Developing CIG’s Investment Strategies
- Implementing procedures for selecting and monitoring investment options
- Identify investment-related risks and establish the companies’ policy towards risk
- Establishing benchmarks for measuring performance
- Formulating criteria and procedures for replacing investments
- Perform other investment-related duties and responsibilities as needed
To effectively meet it’s stated objectives, the committee meets on a bi-weekly basis and on an ad-hoc basis, as market conditions and other circumstances dictate.
CIG Risk Management Committee
Committee Overview: The Risk Management Committee meets quarterly and is made up of the members of CIG Capital Advisor’s Investment Committee in addition to the firm’s Chief Compliance Officer.
Committee Objective: The Risk Management Committee’s primary objective is to provide oversight to the firm’s investment management process and to verify that its processes and controls are effective in protecting CIG’s clients as well as the firm.
Operations: The Committee brings and additional level of surveillance to the firm’s Management of its client’s assets and is designed to provide various oversight to ensure that CIG’s investment methodology is being carried out as prescribed by the Investment Committee. Any potential areas of risk are identified, assessed, and reported in an open, transparent, and object manner.
One way the committee may identify potential risk to the firm’s client portfolios is accomplished by performing periodic portfolio reviews. Prior to each quarterly meeting, members of the committee perform a comprehensive review of various client holdings, allocation, and performance reports to try and identify any possible anomalies which may exist for any client portfolio. If any potential issues are identified by these reviews, they are presented and reviewed by the committee and an appropriate response plan is implemented as necessary.
Other responsibilities of the Committee may include:
- Identify any potential Operational risks and make recommendations as to any necessary changes or enhancements to the firm’s trading or reporting systems
- Identify any potential Compliance (legal or regulatory) risks and make recommendations as to any potential changes within the firm’s Written Supervisory Procedures
- Initiate any other actions as necessary