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.
While there is no requirement uhder (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:
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.
For assistance with your 401(k) investment policy statement, call us at 877-595-0833 or fill out the form below.
Latest Updates & Information
Third quarter, 2017 saw stocks rise amid a brighter outlook for the global economy and better-than-expected corporate earnings.Read full story here
Check out the Third Quarter Market Insights led by Beth Spurry, CFP, CTFA.Watch video here
U.S. Economy – Good The key factors we track, unemployment, housing, and inflation, are still healthy. There has been little change to inflation, which stays solidly below 2%, but remains in a safe zone.Read full story here