Source: Sherman Publications

Township seeks investment advice

by Mary Keck

January 16, 2013

Why spend money on investment advice when you can get it for free? That’s the question on Independence Township Treasurer Paul Brown’s mind.

At the Board of Trustees meeting on January 8, the board voted to do away with their current investment advisors, Munder Capital, and find residents with business and investment acumen, who can offer the same guidance.

“While I’m a CPA (Certified Public Accountant) and I have a lot of things I’ve learned over the years, I’m certainly no expert in investing money. I’d like to get all the help I can get in understanding what’s new out there,” Brown told his fellow board members.

According to Township Investment Policy, the treasurer is designated as the investment officer and has the authority to invest in bonds, securities, and other obligations of the United States.

Although investing is a part of the treasurer’s role, “I believe the board becomes more comfortable having participated in putting together this committee and seeing that I’m using that advice for my decisions,” said Brown.

“I think it’s a great idea,” said Trustee Andrea Schroeder. “I’m a huge proponent of getting people in the community involved,” she added.

As Brown begins the work of investing on behalf of the township, the board hopes to recruit five members of the community to serve on an Investment Advisory Committee (IAC).

Brown described the citizens he’s seeking for the IAC as people who may have securities licenses, successful business owners who have a high net worth, or residents with Masters degrees in business. “I want some really sharp people,” he said.

The treasurer hopes members appointed to the IAC will suggest changes to the township’s current investment policy.

“Our policy is actually more strict than the state regulations,” he said. For example, the township requires only AAA rated investments; however, Brown would like to see the policy reflect the state’s Public Act 20, which allows A or AA rated investments. “Double A is still really good; there’s not much risk in it,” he said.

In addition to revising the investment policy, Brown hopes the IAC will offer him long and short-term investment strategy advice.

Before January 8, the treasurer received long-term investment advice from Munder Capital, a company located in Birmingham that specializes in financial management. During the meeting last Tuesday, Brown sought permission from the board to eliminate Munder Capital.

“We’re paying $28,000 a year, and Munder Capital is essentially having us buy U.S. treasuries, the most conservative investment I can possibly make. On our long-term investments, we earned $158,000 last year, and we paid Munder $28,000 – that is a staggering fee,” Brown explained.

From Brown’s point of view, “I don’t need advice to buy U.S. Treasury bills if that’s what I’m going to do; I can just do that and save $28,000.” He intends to continue using the same strategy for long-term investments without advisement from Munder.

“The win here is the potential to save money and get citizens involved,” said Trustee David Lohmeier. In two 6-0 votes, the board voted in favor of both laying off Munder Capital and developing the IAC. Trustee Jose Aliaga was absent.

After reviewing the citizens’ qualifications, the Board of Trustees will appoint IAC members who will meet quarterly. Applications are currently available on the township’s website: Contact Brown with questions by calling 248-625-5111.