Series 66: 5.2.1.2. Investment Policy Statement

Taken from our Series 66 Online Guide

5.2.1.2. Investment Policy Statement

To help further limit an employer’s liability as a fiduciary, employers can incorporate an investment policy statement (IPS) into their retirement plan. An IPS is a document that outlines a retirement plan’s investment goals and strategies, and serves as a guide for what to invest in, as well as a means of assessing how well the fiduciary has met the policy’s investment goals.

In addition, an IPS outlines how many of the ERISA Section 404(c) requirements are met, including how an employer screens and selects the underlying investments and investment managers, monitors performance, limits expenses in the plan, etc.

Typical investment policy statements include:

Investment goals and objectives

The way the plan will meet these objectives

Selection process for the investments within the plan

The way that the goals and investments will be measured, monitored, and reviewed

An asset allocation and a description of when the assets will be rebalanced

Any limitations on what types of investments can be made

Investment policy statements are one of the first things that the U.S. Department of Labor looks at when it performs an audit of any ERISA-covered plan. During the audit, the Department of Labor reviews how an employer’s retirement plan was managed and administered to see if it deviated from its written investment policies. C

Since you're reading about Series 66: 5.2.1.2. Investment Policy Statement, you might also be interested in:

Solomon Exam Prep Study Materials for the Series 66
Please Enable Javascript
to view this content!