Retirement Plan Advisor - Reason #2

2. Establishing Investment Policies and Procedures

A well written investment policy statement (IPS) provides the framework for consistent investment decisions. Early in the relationship, the Plan Advisor will review the existing policies. In the absence of existing policies, the Plan Advisor will provide an IPS to the institution. Standard IPS language encompasses the topics shown in the table below:

Standard Items Appearing in an Investment Policy Statement

1. Identification of the retirement plan, participants, and fiduciaries. 
2. A statement of purpose for the IPS. 
3. Identification of the various service providers (not necessarily the firm names), with descriptions of their roles, responsibilities, and deliverables to fiduciaries. Service providers may include: the Plan Advisor, record keeper, administrator, custodian, directed trustee, and actuary. 
4. Listing of approved asset classes, with a relevant industry benchmark index for each. 
5. Listing of restricted investments, at the fiduciaries’ discretion (e.g., tobacco, alcohol, firearms, or gambling). 
6. For fiduciary-directed investment portfolios, a statement of asset allocation policy, and rebalancing guidelines. 
7. Listing of investment manager search, selection, and retention criteria. 
8. Description of the replacement process or “Watch List” for managers who no longer meet the selection/retention criteria. 
9. Statement of frequency of investment performance reviews, and general communications procedures for the service providers. 

The IPS should be written in language that gives the fiduciaries latitude to use their best judgment in a given set of circumstances. Rigid investment policies that are not followed could be used against the fiduciaries in a court of law. The Plan Advisor should review the IPS with the fiduciaries at least every two years, or pursuant to significant regulatory changes.


View our next blog entry to continue the series. To learn all Seven Reasons for Hiring a Dedicated Retirement Plan Advisor, download our full whitepaper.

If you have any questions about retirement plan services, or would like to begin talking to a dedicated retirement plan advisor, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.