Professional Money Management

KenC (California)
Posts: 6

Posted:

Does your association use the expertise of a professional money manager?

If so, what has been your experience?

Our association currently has multiple CD's with various maturity dates and several banks.

thanks,

Ken

RogerB (Colorado)
Posts: 5,067

Posted:

KenC, IMHO the priority of investments for HOAs usually does not justify the cost of an independent financial advisor. We provide investment help to the Board as part of our Management fee. I recommend all boards establish a policy on investment of funds; following is an example.

Rules and Regulations on Investment of Reserve Funds

A Reserve fund shall be maintained to provide adequate funds for future capital investments. Reserve funds shall be invested in an account, or accounts, which shall be separate from the annual operating account, in accordance with IRS regulations. Reserve funds shall be invested at the discretion of the Board of Directors who shall consider safety of principle as the highest priority, followed by liquidity of funds, and lastly yield. Within these guidelines all funds shall be managed to maximize yield. A 20 year reserve plan shall be maintained to assist in establishing the amount of reserve funds required. The 20 year reserve plan shall be updated every three years and in any year that a major reserve expense occurs.

The reserve and operating funds needed shall be used each year to determine the Annual budget. Annual disclosures of the reserve funds and the operating funds shall be made to all homeowners.