By Donald B. Trone
I was introduced to the work of Donald Trone at an FPA Residency Program early in my career. Since then, he has been a favorite resource for investment management activities, and I suspect that many of us share the same debt to him for his outstanding work and clear thinking in the area of portfolio management.
With this book, Trone extends his teaching prowess to the investment decisions made by Native American tribal leaders and their investment committees. Readers may recognize the fiduciary practices from The Management of Investment Decisions, a book Trone coauthored with William Allbright and Philip Taylor in 1996. The rest of Trone's message is new and goes beyond how most of us think as we manage client portfolios.
With fiduciary practices as a backdrop, the author weaves a tapestry of action that includes The Sacred Tree, a Native American source for "indigenous wisdom" by Four Worlds Centre for Development Leaning in Alberta. The book's leadership protocols come from The Architecture of Leadership and Character in Action, both from Naval Institute Press. The result is a richly patterned integration of fiduciary and leadership axioms.
The Management of American Indian Investment Decisions is crammed with leadership lessons related to judgment, courage, integrity and discipline, and investment management decisions related to organizing, formalizing, implementing, and monitoring. Comprehensive lists of criteria to assess each area of leadership and investment management are included, and the book is peppered with real-life examples of success.
Trone illustrates the importance of organization and good judgment with a sobering account of fiduciary mismanagement involving the Haskell Foundation, a nonprofit organization formed in 1984. The purpose of the foundation is to raise money and distribute contributions to improve programming and provide student scholarships that further the purposes of Haskell Indian Nations University.
The foundation's director embezzled hundreds of thousands of dollars over a number of years and precipitated a significant financial crisis, which was discovered when checks began to bounce. Under new leadership, the foundation is plodding toward a tarnish-free and fiducially responsible revival. Trone uses this unfortunate example to highlight lessons learned, including: perform a background check on all fiduciaries, require cosignatories on all large checks, and require and review an annual independent audit of the organization.
Unlike the Haskell fiasco, other lessons are presented in the context of exemplary forethought and judgment. For instance, The Indian Land Tenure Foundation was founded as a 501(c)(3) in 2001 and is based in Little Canada, Minnesota. From its beginning, leaders established rigorous policies and procedures for managing gifts and implemented the steps necessary to prudently manage the large endowment, including a written investment policy statement that included careful monitoring.
This book adds significantly to the body of literature related to investment decision making. It is quick to read but takes time to appreciate. It may appear to be limited to a unique population; on the contrary, it provides excellent protocols for those of us who have fiduciary and leadership responsibilities to any boards of directors.
Jon Ford, CFP®, of CF Financial Planning Solutions, Inc. in Mesa, Arizona, writes a regular "Financial Fundamentals" column for the Cedar Falls Timesin Iowa.
Fiduciary Ethos (2007-2008)