{"id":8926,"date":"2021-09-13T07:09:34","date_gmt":"2021-09-13T12:09:34","guid":{"rendered":"https:\/\/rixtrema.com\/blog\/?p=8926"},"modified":"2021-09-14T06:50:19","modified_gmt":"2021-09-14T11:50:19","slug":"what-401k-plan-sponsors-need-to-know-about-the-investment-policy-statement","status":"publish","type":"post","link":"https:\/\/rixtrema.com\/blog\/what-401k-plan-sponsors-need-to-know-about-the-investment-policy-statement\/","title":{"rendered":"What 401k Plan Sponsors Need to Know About the Investment Policy Statement"},"content":{"rendered":"\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<ul class=\"wp-block-list\"><li><strong><a href=\"#h-scope-of-investment-policy-statement\">Scope of Investment Policy Statement<\/a><\/strong><\/li><li><strong><a href=\"#h-main-purpose-and-objectives-of-investment-policy-statement\">Main Purpose and Objectives of Investment Policy Statement<\/a><\/strong><\/li><li><strong><a href=\"#h-scope-of-investment-policy-statementmain-purpose-and-objectives-of-investment-policy-statementwhat-advisors-need-to-know-about-the-ips\">What Advisors Need to Know about the IPS<\/a><\/strong><\/li><\/ul>\n\n\n\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"has-white-color has-text-color has-background wp-block-heading\" id=\"h-scope-of-investment-policy-statement\" style=\"background-color:#61314b\"><strong>Scope of Investment Policy Statement<\/strong><\/h2>\n\n\n\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p><span style=\"font-weight: 400;\">An Investment Policy Statement is a document signed between a portfolio manager and a client that describes general rules, restrictions, and investment structures for the management. In this policy, general objectives and investment goals must be outlined, as well as the strategies that should be employed to meet these objectives and goals.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The IPS must needn&#8217;t be described in detail, but it\u2019s important for the plan fiduciaries to understand the document, so every fiduciary can adhere to the following rules:&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">1) meaningful guidelines for the committee to fulfill their duties properly&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">2) instructions written in a simple way, so an intelligent committee member could understand them and implement them.<\/span><\/p>\n\n\n\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"has-white-color has-text-color has-background wp-block-heading\" id=\"h-main-purpose-and-objectives-of-investment-policy-statement\" style=\"background-color:#61314b\"><strong style=\"color: revert; font-size: revert;\">Main Purpose and Objectives of Investment Policy Statement<\/strong><\/h2>\n\n\n\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p><span style=\"font-weight: 400;\">Although all 401k plan sponsors are familiar with the IPS, not everyone knows what it is designed to do. So, here is a brief summary:<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Firstly, having an investment policy statement doesn\u2019t necessarily increase plan sponsor liability, it\u2019s just a prudent policy document that makes communication between fiduciaries and their clients easier. An IPS is all about communication, as it sets precise guidelines and procedures for management in the investment process.&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Secondly, it\u2019s not legally required, but having one is equally good for both sides: plan sponsors and their clients, especially if you ever undergo a Department of Labor audit. Nearly 87% of all ERISA-covered plans have an IPS, because not having an investment policy statement is considered a red flag.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Thirdly, once you get your IPS written you have to follow it. Not following the rules can bring some problems in the future, because having an IPS that you don\u2019t follow is even worse than not having one, as it would be evidence that you are in breach of your fiduciary duty.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">And finally, a well-designed Investment Policy Statement enables both the investor and the manager to stay focused on the long-term objectives; the IPS provides general investment goals and objectives of a client and describes strategies the manager should implement to meet these objectives.<\/span><\/p>\n\n\n\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"has-white-color has-text-color has-background wp-block-heading\" id=\"h-scope-of-investment-policy-statementmain-purpose-and-objectives-of-investment-policy-statementwhat-advisors-need-to-know-about-the-ips\" style=\"background-color:#61314b\"><strong style=\"color: revert; font-size: revert;\">Scope of Investment Policy StatementMain Purpose and Objectives of Investment Policy StatementWhat Advisors Need to Know about the IPS<\/strong><\/h2>\n\n\n\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p><span style=\"font-weight: 400;\">So, if you\u2019re an investment manager, it\u2019s up to you to decide whether you need an IPS or not, but a well-conceived statement should make the process more systemized and straight-forward for both sides, and help you avoid potential liabilities. But remember: once the investment policy statement is drawn up, it should be followed carefully, as it\u2019s a guarantee of your clients\u2019 best interest.<br \/><br \/><\/span><\/p>\n<p><span style=\"font-weight: 400;\">For more about how you can supercharge your financial advice business, check out our extensive software at <a href=\"https:\/\/rixtrema.com\/\" target=\"_blank\" rel=\"noopener\">Rixtrema<\/a>.<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><a href=\"https:\/\/rixtrema.com\/requestdemo\/larkspurexecutive?source=blog13092021\">Request a free demo today<\/a>.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>An Investment Policy Statement is a document signed between a portfolio manager and a client that describes general rules, restrictions, and investment structures for the management.<\/p>\n","protected":false},"author":11,"featured_media":8927,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[239],"tags":[123,41,84],"class_list":["post-8926","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing","tag-401k-plans","tag-401kfiduciaryoptimizer","tag-investment-expense"],"jetpack_featured_media_url":"https:\/\/rixtrema.com\/blog\/wp-content\/uploads\/2021\/09\/What-401k-Plan-Sponsors-Need-to-Know-About-the-Investment-Policy-Statement.jpg","yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v15.9.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What 401k Plan Sponsors Need to Know About the Investment Policy Statement<\/title>\n<link rel=\"canonical\" href=\"https:\/\/rixtrema.com\/blog\/what-401k-plan-sponsors-need-to-know-about-the-investment-policy-statement\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What 401k Plan Sponsors Need to Know About the Investment Policy Statement\" \/>\n<meta property=\"og:description\" content=\"An Investment Policy Statement is a document signed between a portfolio manager and a client that describes general rules, restrictions, and investment structures for the management.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/rixtrema.com\/blog\/what-401k-plan-sponsors-need-to-know-about-the-investment-policy-statement\/\" \/>\n<meta property=\"og:site_name\" content=\"RiXtrema.com\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/LarkspurRiXtrema\/\" \/>\n<meta property=\"article:published_time\" content=\"2021-09-13T12:09:34+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2021-09-14T11:50:19+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/rixtrema.com\/blog\/wp-content\/uploads\/2021\/09\/What-401k-Plan-Sponsors-Need-to-Know-About-the-Investment-Policy-Statement.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"700\" \/>\n\t<meta property=\"og:image:height\" content=\"400\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@RiXtrema\" \/>\n<meta name=\"twitter:site\" content=\"@RiXtrema\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\">\n\t<meta name=\"twitter:data1\" content=\"3 minutes\">\n<!-- \/ Yoast SEO Premium plugin. -->","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/rixtrema.com\/blog\/wp-json\/wp\/v2\/posts\/8926","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/rixtrema.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/rixtrema.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/rixtrema.com\/blog\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/rixtrema.com\/blog\/wp-json\/wp\/v2\/comments?post=8926"}],"version-history":[{"count":4,"href":"https:\/\/rixtrema.com\/blog\/wp-json\/wp\/v2\/posts\/8926\/revisions"}],"predecessor-version":[{"id":8934,"href":"https:\/\/rixtrema.com\/blog\/wp-json\/wp\/v2\/posts\/8926\/revisions\/8934"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/rixtrema.com\/blog\/wp-json\/wp\/v2\/media\/8927"}],"wp:attachment":[{"href":"https:\/\/rixtrema.com\/blog\/wp-json\/wp\/v2\/media?parent=8926"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/rixtrema.com\/blog\/wp-json\/wp\/v2\/categories?post=8926"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/rixtrema.com\/blog\/wp-json\/wp\/v2\/tags?post=8926"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}