How to Write an Investment Policy Statement

Contents

Foreword

Section One: Why Plan Sponsors and All Fiduciaries Need a Formal Process for Writing Their Investment Policy Statement

Chapter 1: Erisa and the Challenge of Fiduciary Responsibility

Writing an Investment Policy

What Is a Fiduciary?

Fiduciary Liability

Chapter 2: Your Fiduciary Responsibilities and Liabilities Under Erisa

Five Fiduciary Responsibilities

Fiduciary’s Personal Liability

A Fiduciary’s Primary Role Is to Manage the Process

Chapter 3: What Is an Investment Policy Statement and What Are the Benefits?

Risk Management

Monitor Investments

Summary

Chapter 4: Utilize the Safe Harbor Provisions Provided by Erisa

Prudent Experts

Five Recognized Safe Harbor Rules

Chapter 5: Complying with Erisa Section 404(c)

Section Two: How to Get Started and Steps to Formalize the Process

Chapter 6: Assembling the Documentation

Chapter 7: Steps to Formalize the Process

Step 1: Decide on Plan Goals, Objectives, and Strategies

Step 2: Decide on Strategy for Managing Risk

Step 3: Determine the Risk Tolerance of the Plan

Step 4: Set Forth Guidelines for Asset Classes

Step 5: Implement an Asset-Allocation Policy

Step 6: Mutual Funds Recommendations

Step 7: Delegate Investment Management Responsibility

Step 8: Investment Monitoring and Reporting

Section Three: The Template IPS

Chapter 8: Sample IPS Templates

Two Distinct IPS Samples

Organization of Templates

Chapter 9: Sample IPS Template #1

Step 1. Executive Summary and Background

Step 2. Purpose of the Investment Policy Statement

Step 3. Duties and Responsibilities

Step 4. Asset Class Guidelines

Step 5. Investment Manager Selection

Step 6. Monitoring the Investment Managers

Step 7. Controlling and Accounting for Investment Expenses

Step 8. Investment Policy Review and Monitoring

Chapter 10: Sample IPS Template #2

Executive Summary

Part I—Purpose

Part II—Investment Management Objectives

Part III—Roles and Responsibilities

Part IV—Investment Manager Selection

Part V—Investment Monitoring and Review

Part VI—Manager Termination

Part VII—Additional Provisions (optional)

Conclusion: Message to Plan Sponsors

Glossary

Appendix

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Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Copyright © 2003 by Marketplace Books. All rights reserved.

Published simultaneously in Canada.

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