Investment Policy Statement Development

While the Uniform Prudent Investor Act requires the creation of an Investment Policy Statement (IPS), ERISA is silent regarding the structure of a prudent investment process. Nonetheless, an IPS is part of the Uniform Fiduciary Standard of Care, and most likely one of the first items a DOL auditor will request during an audit.

A fiduciarily sound IPS does the following:

Documents that you instituted and adhered to a prudent process.

Provides working framework and continuity for fiduciaries.

Outlines duties and responsibilities of each fiduciary

Keeps the investment process intact during market volatility.

Sets guidelines for the selection, monitoring, and replacement of investment options.

Negates “Monday morning quarterbacking.”