Editor's note: What follows is an excerpt. Click here for the full version of this article, including an investment policy statement checklist for fiduciaries.
The skillful construction of a retirement plan's investment policy statement involves a number of considerations. For example, ERISA's investment provisions require that fiduciaries apply prevailing investment industry practices. That would include, for example, considering both qualitative and quantitative factors when selecting, monitoring and removing an investment.
The implementation of the IPS requires diligence by plan committees in meeting and applying the criteria to the investment options offered to the participants. For example, a material change of a portfolio manager requires that a committee consider the impact of the change on the investment, determine whether that change could adversely impact the quality of the investment and evaluate its potential consequences for the participants.
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