Sample Delegation of Investment Duties

The Uniform Prudent Investor Act, adopted by most states in the U.S., asserts the following:

“A trustee may delegate investment and management functions that a prudent trustee of comparable skills could properly delegate under the circumstances. The trustee shall exercise reasonable care, skill, and caution in: (1) selecting an agent; (2) establishing the scope and terms of the delegation, consistent with the purposes and terms of the trust; and (3) periodically reviewing the agent’s actions in order to monitor the agent’s performance and compliance with the terms of the delegation” (UPIA §9(a)(1-3)).

A Delegation of Investment Duties serves to clearly communicate the terms of the delegation–return objective, expected risk, agreed upon fee, anticipated distributions, and any other parameters for the investment manager.