Investment Mandate Review for High-Net-Worth Muslim Families
A family investment mandate converts broad goals into written instructions that advisers, managers and family decision-makers can apply consistently. For a high-net-worth Muslim household, the mandate should connect Shariah requirements, risk limits, liquidity, tax ownership and family governance rather than treating each portfolio as an isolated product.
This checklist is educational. It is not personalised financial, tax, legal or Shariah advice. Product terms and laws change, and the family should obtain current advice from appropriately authorised professionals.
1. State the purpose of the capital
Separate capital needed for near-term spending, business reserves, education, retirement income, philanthropy and long-term intergenerational growth. Give each pool a time horizon and an owner. A mandate becomes difficult to apply when one portfolio is expected to provide immediate liquidity, stable income and maximum long-term growth at the same time.
2. Record the Shariah standard
Name the screening methodology the family has adopted and who may interpret it. Specify how prohibited business activities, financial-ratio screens, non-compliant income and purification will be handled. Record whether cash management, Sukuk, property, private companies and alternative investments follow the same process or require additional review. Keep evidence dates and escalation rules.
3. Define decision authority
List who may appoint or dismiss an adviser, approve the strategic allocation, sign transactions, access statements and authorise withdrawals. For a trust or company, align the mandate with the deed, memorandum, resolutions and signatory rules. A family committee cannot exercise powers the legal owner has not granted.
4. Map risk in rand and family terms
Describe the maximum loss, volatility or period of illiquidity the family can tolerate without abandoning the plan. Add concentration limits for the family business, employer shares, property, a single manager, country and currency. A portfolio can look diversified while the total family balance sheet remains dominated by one business or property market.
5. Set liquidity tiers
Divide assets into immediate cash, planned-spending reserves, medium-term capital and long-term growth. Record the expenses each tier must cover and the replenishment rule after a withdrawal. Illiquid investments should have a clear maximum allocation and should not be used to fund known short-term obligations.
6. Specify permitted and restricted assets
List permitted asset classes and instruments in plain language. Also list prohibited activities such as conventional interest-bearing instruments, unclear leverage or structures that have not passed the adopted review. Require prior written approval for assets outside the normal mandate. This makes exceptions visible instead of allowing them to accumulate.
7. Coordinate ownership and tax reporting
Record which person or entity owns each account and why. The investment mandate should agree with tax records, trust or company governance and the family’s estate plan. Ownership should not be moved merely to chase a tax result without legal, tax, exchange-control and Shariah review.
8. Make fees comparable
Show advice, discretionary management, platform, custody, fund, performance, transaction and foreign-exchange fees separately. Require an annual total-cost schedule in rand and as a percentage of assets. Compare the cost to the service delivered and record conflicts or revenue sharing.
9. Define adviser review questions
Is the adviser’s authorisation current and relevant to the service?
Who holds client assets and who can move them?
Which parts of the advice are independent and which providers pay fees?
How are Shariah breaches, conflicts and errors reported?
What evidence will the family receive after every material decision?
South African authorisation can be checked through the FSCA FSP search.
10. Set monitoring triggers
Reviewing once a year may be insufficient after a death, incapacity, business sale, major distribution, emigration, tax-residence change, large market fall or screening breach. Define which events require an immediate review and who must convene it.
11. Use a decision register
For each material decision, record the proposal, evidence reviewed, conflicts disclosed, Shariah review, professional input, decision, dissent, owner and deadline. Attach implementation confirmations and update the balance sheet. This creates continuity when family members or advisers change.
12. Measure what matters
Performance should be compared with the mandate’s purpose and risk, not only a market index. Monitor liquidity coverage, concentration, total cost, after-tax cash flows, Shariah evidence freshness, unresolved actions and progress toward family goals. Avoid changing strategy solely because another portfolio recently performed better.
Official starting points
Practical outcome: an authorised person should be able to read the mandate and understand the capital’s purpose, permitted investments, risk boundaries, Shariah controls, decision rights, fee expectations and review triggers.
