How to Write an Investment Policy Statement: (12 Wiley Trading)

An indispensable resource for every financial service professionals developing an IPS The Investment Policy Statement (IPS) is one of the most critical documents fiduciaries must draft. For years, ERISA and other industry regulations have governed the guidelines all fiduciaries must comply with when drafting one. But the current climate of corporate scandal and the 2008 global banking crisis have led to increased scrutiny by regulators, prompting firms to take a closer look at the quality and integrity of their IPSs and to take steps to have a rigorous formal process in place for drafting them. Endorsed by the Foundation of Fiduciary Studies, this concise guide provides a rigorous framework and the expert insight, information and guidance you need to guarantee that your IPS is in complete compliance with all ERISA-directed requirements. Provides a step-by-step plan for creating a uniform IPS that every advisor in the office can follow Defines the duties and responsibilities of all parties involved, while clarifying diversification guidelines and providing methods for keeping costs under control Packed with ready-to-use templates, sample forms, letters and other documents, diagrams and other valuable tools, including sample Policy Statement downloadable at the companion website Designed to get you quickly up to speed on what you need to know to confidently serve your clients with the highest standards of care and protection

Table of Contents:
Foreword by Don Trone 13 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 19 Writing an Investment Policy 19 What Is a Fiduciary? 20 Fiduciary Liability 21 Chapter 2 YOUR FIDUCIARY RESPONSIBILITIES AND LIABILITIES UNDER ERISA 23 Five Fiduciary Responsibilities 23 Fiduciary's Personal Liability 24 A Fiduciary's Primary Role Is to Manage the Process 25 Chapter 3 WHAT IS AN INVESTMENT POLICY STATEMENT AND WHAT ARE THE BENEFITS? 27 Risk Management 27 Monitor Investments 28 Summary 29 Chapter 4 UTILIZE THE “SAFE HARBOR” PROVISIONS PROVIDED BY ERISA 31 Prudent Experts 31 Five Recognized "Safe Harbor" Rules 31 Chapter 5 COMPLYING WITH ERISA SECTION 404(c) 33 SECTION TWO: How to Get Started and Steps to Formalize the Process Chapter 6. ASSEMBLING THE DOCUMENTATION 37 Chapter 7 STEPS TO FORMALIZE THE PROCESS 39 STEP 1: Decide on Plan Goals, Objectives, and Strategies 39 STEP 2: Decide on Strategy for Managing Risk 39 STEP 3: Determine the Risk Tolerance of the Plan 40 STEP 4: Set Forth Guidelines for Asset Classes 41 STEP 5: Implement an Asset-Allocation Policy 41 STEP 6: Mutual Funds Recommendations 41 STEP 7: Delegate Investment Management Responsibility 42 STEP 8: Investment Monitoring and Reporting 42 SECTION THREE: The Template IPS Chapter 8 SAMPLE IPS TEMPLATES 45 Two Distinct IPS Samples 45 Organization of Templates 45 Chapter 9 SAMPLE IPS TEMPLATE #1: For Participant-Directed 401(k) That Intends to Comply with ERISA Section 404(c) 47 STEP 1. Executive Summary and Background 47 STEP 2. Purpose of the Investment Policy Statement 48 STEP 3. Duties and Responsibilities 50 STEP 4. Asset Class Guidelines 52 STEP 5. Investment Manager Selection 54 STEP 6. Monitoring the Investment Managers 55 STEP 7. Controlling and Accounting for Investment . Expenses 57 STEP 8. Investment Policy Review and Monitoring 58 Chapter 10 SAMPLE IPS TEMPLATE #2: For High-Net-Worth Individual Setting Up a Family Trust 59 Executive Summary 60 PART I—Purpose 61 PART II—Investment Management Objectives 61 PART III—Roles and Responsibilities 62 PART IV—Investment Manager Selection 63 PART V—Investment Monitoring and Review 65 PART VI—Manager Termination 67 PART VII—Additional Provisions (optional) 67 Conclusion MESSAGE TO PLAN SPONSORS 69 Glossary 71 The Firm Profile 79 About the Author 87