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Investment Policy Statement Topics and Processes Need a Review

Complimentary ClassesInvestment policy statement topics need to be reviewed on a regular basis.  During a recent TPSU Retirement Committee Education (TRCE) session the committee learned a lot!  The educator reviewed the plan sponsor’s IPS in advance of the education session.  As the result, the TPSU Educator was able to confirm where the IPS was as tight as it should be.  The educator was also able to open the Retirement Committee’s eyes to some areas of unnecessary exposure.  Identifying areas where the investment policy statement was too specific for the Plan Sponsor’s own good!

A plan sponsor needs to have the investment policy statement to serve as a guardrail.  An investment policy statement becomes the guardrail for keeping the plan sponsor, investment managers, and other providers on the same page.

The investment policy statement is a generally accepted best practice for plan sponsors to adopt.  Plan sponsors wanting to have their investment policy statement reviewed or wanting to have formal fiduciary education for their retirement committee  – CLICK HERE for additional information on TPSU’s Retirement Committee Education.  Complementary Fiduciary Education is a big part of what TPSU provides for plan sponsor retirement committees.

Developing and adopting investment policy statement topics is a challenge for plan sponsors.  This is especially true for small businesses.  Small business owners can lack the necessary resources and expertise to create an IPS.  This is according to a recent Forbes article penned by Chris Carosa, chief contributing editor of FiduciaryNews.com.  Moreover, retirement committee members frequently do not fully comprehend their own fiduciary responsibility.  Therefore, they worry that signing any service agreement may result in liability down the road.

Plan sponsors should feel that way.  If a plan is put in place, retirement plan sponsors are exposed to regulatory oversight.  An investment policy statement puts that fact in writing.  Plan sponsors fear increased scrutiny and audits by the Department of Labor and Internal Revenue Service.  It could potentially expose sponsors to compliance concerns and lawsuits.

Steff Chalk

Steff Chalk

Managing Editor at 401kTV
Steff C. Chalk is Executive Director of The Retirement Advisor University, a collaboration with UCLA Anderson School of Management Executive Education. Steff also serves as Executive Director of The Plan Sponsor University and is current faculty of The Retirement Adviser University.
Steff Chalk
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