No Investment Policy Statement
The investment policy statement outlines the specific
strategies the plan follows to meet the objectives of each and every one
of the plan participants. Sometimes this is called an IPS and it outlines the
asset allocation, the risk tolerance of participants, and the liquidation
requirements of participants.
Lacking in Many Plans
Invariably when reviews of plans are completed, this is
one area that finds plan sponsors failing across the board. This is surprising,
since one of the most important jobs of the fiduciary is the development and
ongoing maintenance of this statement. The IPS is designed to ensure the
investment options are not only prudent, but also offer the needed
diversification to meet the objectives of the plan participants.
The Take Home
In a nutshell the IPS is a roadmap to making prudent
decisions within the plan and it keeps the plan on course during the ups and
downs of the market when emotions tend to rule rather than logic.
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