What are directors’ responsibilities in approving the adviser’s fees?
The adviser’s fees are part of the advisory contract that directors review and approve every year. The board is required to request and evaluate—and the adviser is obligated to furnish—the information that may be reasonably necessary to evaluate the contract. The SEC requires boards to consider a host of factors and for funds to disclose the basis for the board’s approval. Directors participate in numerous meetings to consider and review hundreds if not thousands of pages of detailed information in the contract approval process.
