During the second quarter of 2018, Colonial began to offer a fully discretionary investment-management service to provide options that better suit the investment-committee governance needs of new and existing clients. All Colonial clients will have the option of selecting non-discretionary advisory or discretionary management services associated with the investment decision-making process and/or the administrative tasks associated with implementing an institutional investment portfolio.

 

Discretionary Investment Management

  • Clients and investment committees will approve an investment policy statement (“IPS”) with guidance from Colonial Consulting.
  • Colonial will make investment decisions within the limits of the IPS without investment-committee approval.
  • On the client’s behalf, Colonial will implement all of Colonial’s decisions on investing in and redeeming from investment managers and strategies, including manager position sizing, without investment-committee or client staff involvement.
  • Colonial will direct the movement of cash funds to effect investments and redemptions, including raising the required cash to satisfy private fund capital calls, the client’s cash/spending needs, etc.
  • Colonial will execute all portfolio rebalancing deemed appropriate.
  • Colonial will oversee the selection of a custodian to hold client cash for investments and custody any separately managed investment accounts. Clients bear all custodian fees and expenses.
  • To enable Colonial to implement and execute investment transactions, discretionary management clients will provide Colonial a power of attorney, authorizing us to act on their behalf in connection with such transactions. Colonial will use this power of attorney to implement investment decisions as described above on the client’s behalf.  Discretionary clients receiving this transactional support will pay a small additional fee to address the impact on Colonial’s operational infrastructure, costs, and regulatory compliance.
  • Combining the power of attorney implementation and our bespoke model to investment manager selection, Colonial clients will own each investment manager relationships.
  • Colonial will use an accounting firm with expertise to assist us in maintaining control of cash transactions and recordkeeping, at no additional cost to clients.

Colonial will not hold client funds directly.  At the same time, Colonial will be deemed to have constructive custody of client funds and will undergo surprise examinations conducted in accordance with Rule 206(4)-2 of the Investment Advisers Act of 1940.

 

Colonial Consulting has been focused on avoiding conflicts of interest since its inception and we take seriously the fiduciary responsibility we owe to our clients.  We consider the best way for Colonial to reduce the perceived conflict in investment decision-making under both the advisory and discretionary management models is to charge the same fee for the investment decision-making aspects of both models.  Accordingly, new clients that select Colonial to provide discretionary investment management will pay a management fee for such investment advice pursuant to the same fee schedule as a new client selecting non-discretionary advisory consulting.  The administrative fee referenced above would be an additional charge for the transaction execution.