Investment Policy Statement

An Investment Policy Statement (IPS) is a client-specific document designed to address the objectives, constraints, goals, and oversight procedures that govern the investment related procedures of a Retirement Plan under ERISA. An IPS should also include information regarding how assets will be allocated, acceptable risk levels, and standards for performance measurement.  An IPS will protect the plan committee or other fiduciaries responsible for investments by setting out procedures for fulfilling fiduciary responsibilities.

Is there a downside to having an IPS?  Yes, if it’s not followed.[1] 

While there is no requirement under (ERISA) that a company must have an IPS, if created an IPS should have the necessary components to demonstrate that a clear process and methodology are in place for making investment decisions.

The IPS answers the following critical questions for the fiduciaries:

  • The purpose of the plan
  • Investment Objectives
  • Roles & Responsiblities
  • Investment Manager Selection
  • Investment Selection
  • Performance Monitoring
  • Investment Expense Accounting

Once created, we work with plan sponsors to ensure it is implemented as designed. We review the IPS at least annually. 

One of the main purposes of the IPS is to create a chain of communication between all parties and as a way to communicate with the plan participants in helping them understand the rationale for the plan’s design, especially as it relates to their investment choices. The IPS is a great tool to assure plan participants that the goal of the Plan is to provide strong investment options, optimum asset diversification, reduce risk and lower investment costs.


[1] In the case of Tussey v. ABB. Inc., Plan Sponsor was ordered to pay $21.8 Million dollars to make up for investment losses found to be caused where an IPS was adopted but not correctly followed.

For assistance with your 401(k) Investment Policy Statement, call us at 877-595-0833 or fill out the form below.

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Latest Updates & Information

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International Markets continue to be the most favored area of investment for the first quarter of 2018 and looking forward for the next 12 months. The best performing asset class in Q1 was emerging market.

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4 Q 2017 Commentary

Recent allocation changes have yielded good results in 2017. A greater exposure to International Equities turned out to be timely. There is still room for normalizing this allocation if you have not done so yet.

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Fourth Quarter 2017 Market Insights Video

Check out the Fourth Quarter Market Insights led by Beth Spurry, CFP, CTFA.

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