COLLECTED WISDOM™ on Investment Policies
Though the law does not require a 401k plan adopt an investment policy statement, most experts agree that adopting one is a key and crucial first step in providing plan fiduciaries with a clear roadmap. Learn more from these resources.
Summary: This article presents two checklists focused on the monitoring of 401k plan investments. The first takes a macro view, itemizing common issues that warrant a deeper dive for fiduciary understanding. The second relates solely to target date funds, in order to assure attention to eight items that the Department of Labor identified in a notice issued earlier this year.
Source: Erisacloud.com, April 2013
Summary: Fred Reish notes that in reviewing investment policy statements of 401k and 403(b) plans, he has observed that many lack specific criteria for the selection and monitoring of target-date funds, or, if there are criteria, that they are overly broad and not particularly helpful to plan committees. While there are no clear legal guidelines to direct this process, Fred suggests some best practices.
Source: Plansponsor.com, December 2012
Summary: This is a sample IPS prepared by DWS Investments. It is a Word format document.
Source: DWS Investments (Word Document), October 2012
Summary: Only about half of all defined contribution plan sponsors have a written investment policy statement, according to studies by PSCA, Hewitt Associates and BARRA Rogers Casey. How can a plan sponsor select and monitor investment options or ensure Procedural Prudence without having an investment policy? In our opinion, they can't.
Source: 401khelpcenter.com, September 2012
Summary: The purpose of an Investment Policy Statement (IPS) is to assist the Investment Committee in effectively supervising, monitoring and evaluating the management of the Retirement Plan. This is a sample IPS prepared by Fi360.com.
Source: Fi360.com 
, September 2012
Summary: An Investment Policy Statement is a soup-to-nuts blueprint for the plan, its administration and its ongoing maintenance. But a good IPS doesn't stop there. It is a living, breathing document that shifts with long-term investment market trends and changes in employee demographics. It should be constantly re-evaluated and slavishly adhered to.
Source: Smart Business, July 2012
Summary: At least once a year plan sponsors and other plan fiduciaries should take a critical look at their investment fund lineups. Here are eight items that are normally considered during a review.
Source: Employee Benefit News, July 2012
Summary: In outlining the traditional structure for an IPS, the CFA Institute retains language from the era preceding the dominance of 401k plans in the institutional realm. While this structure certainly continues to work well for private individuals and single portfolio institutions, it represents an awkward construct for 401k plans.
Source: Fiduciarynews.com, May 2012
Summary: Although a good IPS can be a defense in a lawsuit asserting breaches of fiduciary responsibility, it is a double-edged sword -- it can be very expensive to depart from it. Investment fiduciaries need to make sure that they have read and understand the IPS.
Source: Osler, Hoskin & Harcourt LLP, May 2012
Summary: The importance of maintaining and adhering to a sound investment policy statement is widely embraced as the guiding document from which other fiduciary responsibilities flow. At times, though, it is instructive to see how the courts reinforce the importance of this concept in a judicial review.
Source: FI360.com, April 2012
Summary: Building and monitoring an investment array fopr a qualified retirement plan is a complex task with numerous difficult decisions. Great care should be taken when assembling the team that oversees the array. White paper shows employers what to look for in a service provider's due diligence process.
Source: Securian , April 2012
Summary: A Dynamic Investment Policy Statement (IPS) can derisk your pension plan without your investment committee spending a great deal of time and missing opportunities to lessen risk. It's as simple as that.
Source: Vanguard, May 2011
Summary: If you're a 401k Plan Sponsor, take another look at your IPS. Are your investment goals updated to reflect the language of the modern investment environment, or is your IPS just a travel agent with no clue about Tahiti?
Source: Fiduciarynews.com, May 2011
Summary: This checklist is intended to provide a framework to assist fiduciaries of qualified retirement plans, in consultation with their counsel and/or investment advisor, in developing and drafting an investment policy statement for their plan.
Source: Putnam Retirement Services , March 2011
Summary: Many investment policy statements either don't have provisions for qualified default investment alternatives or, if there are provisions, have inadequate descriptions of the selection and monitoring process. While the law does not contain specific rules about the issues that plan sponsors should evaluate in selecting and monitoring target date funds, the points addressed in this article are a good starting place.
Source: Drinker Biddle & Reath LLP, April 2010
Summary: It is commonly accepted that fiduciaries of participant-directed plans have a duty to select, monitor, and remove investments prudently. The threshold question is whether a fiduciary's duty to remove investments applies to individual investments or whether the decisions are judged on the basis of the investments in the aggregate.
Source: Plansponsor.com (free registration may be required), December 2009
Summary: This article outlines several asset management approaches and discusses the importance of aligning the approach with investor risk preferences. If the investment policy ignores this critical "calibration," there is little hope that the investor will be able to maintain the policy during recessionary periods.
Source: Schultz Collins Lawson Chambers , January 2009
Summary: In this paper, a new perspective on "prudent process" and "value" will be introduced, and the traditional definitions will be challenged. Fiduciaries will also be shown the type of quantitative data they need to objectively determine if their "prudent process" is actually delivering "value" to their participants.
Source: Investment Horizons , June 2007
Summary: If the recent wave of lawsuits over 401k fees launched by Schlichter, Bogard, and Denton did not catch the attention of 401k fiduciaries, Roger Ibbotson's recent paper, "National Savings Rate Guidelines for Individuals," should. In this paper, the authors quantified why the average boomer's retirement will most likely be financially strapped.
Source: Investment Horizons , June 2007
Summary: This just released report from November 2006 was produced by the 2006 ERISA Advisory Council's Working Group on Prudent Investment Process. The desired result of the Working Group was to discover and present matters that would enhance the ability of fiduciaries to execute their responsibilities under ERISA.
Source: U.S. Department of Labor, May 2007
Summary: This article addresses salient legal issues confronting plan fiduciaries today in connection with the investment of employee benefit plan assets.
Source: Benefits & Compensation Digest , May 2005
Summary: In this article, the author contends that, due to changes in the investment process, regulatory and legal environments, the procedures for oversight used by many plan sponsors may no longer be prudent. The article sets out a best practices approach to process, asset allocation and investment monitoring, including 10 analytics plan sponsors should focus on, intended to mitigate fiduciary liability for plan sponsors and improve the investment choices made available to participants.
Source: 401khelpcenter.com, January 2005
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