Is Your Investment Policy Statement Still Working? Why Every Committee Should Review It Regularly
An Investment Policy Statement (IPS) is one of the most important governance documents a retirement plan committee or institutional investment committee can maintain. Yet many organizations create an IPS, file it away, and rarely revisit it until a significant issue arises.
Markets change. Regulations evolve. Organizational goals shift. An Investment Policy Statement should serve as a living document that helps guide consistent, well-documented investment decisions—not simply a document that’s checked off during the plan’s implementation.
Regular IPS reviews can help committees maintain a disciplined decision-making process and ensure the document continues to reflect the organization’s objectives and governance practices.
1. Remember What an Investment Policy Statement Is Designed to Do
An Investment Policy Statement establishes the framework for how investment decisions will be made. Rather than predicting markets or selecting specific investments, it outlines the committee’s investment philosophy, objectives, responsibilities, monitoring procedures, and governance process.
A well-written IPS typically addresses:
- Investment objectives
- Roles and responsibilities
- Asset allocation guidelines
- Investment selection criteria
- Monitoring procedures
- Performance evaluation methodology
- Watch list and replacement guidelines
- Meeting and documentation expectations
A committee that follows its IPS demonstrates a more consistent and disciplined governance process.
Tip: Review your IPS annually to ensure it accurately reflects how your committee is actually operating—not how it operated several years ago.
2. Business Goals Change—Your IPS Should Reflect That
Organizations rarely remain static. Growth, acquisitions, workforce changes, mergers, leadership transitions, or changes in retirement plan participation can all influence investment oversight priorities.
An IPS written five years ago may no longer align with:
- Current plan demographics
- Participant behavior
- Organizational objectives
- Committee structure
- Risk considerations
Periodic reviews provide an opportunity to determine whether updates are appropriate.
Tip: Consider reviewing your IPS whenever there is a significant organizational change—not just on a calendar schedule.
3. An IPS Promotes Consistent Decision-Making
Market volatility often creates pressure to make reactive investment decisions.
An Investment Policy Statement helps committees focus on established procedures rather than short-term market headlines by creating a documented decision-making framework.
Instead of asking:
“What should we do because the market is down?”
The committee asks:
“What does our governance process call for under these circumstances?”
This disciplined approach helps create consistency over time.
Tip: During periods of market volatility, review your IPS before discussing investment changes.
4. Regular Reviews Help Support Strong Fiduciary Governance
Committee members have an ongoing responsibility to monitor investments and document decisions as part of their governance process.
Regular IPS reviews can help committees evaluate whether:
- Investment criteria remain appropriate
- Monitoring procedures are current
- Committee responsibilities are clearly defined
- Meeting frequency remains adequate
- Documentation practices remain consistent
The review itself often becomes an important governance discussion.
Tip: Include an IPS review as part of your annual committee calendar to help ensure it isn’t overlooked.
5. Service Providers and Investment Menus Change
Over time, retirement plans may experience:
- Recordkeeper changes
- Investment lineup adjustments
- New investment options
- Updated benchmarking practices
- Changes in participant education initiatives
While these changes don’t automatically require an IPS revision, they provide a good opportunity to determine whether the document continues to align with the committee’s governance practices.
Tip: Review the IPS whenever significant service provider or investment lineup changes occur.
6. Documentation Matters
One of the greatest values of an Investment Policy Statement is the governance process it helps support.
An IPS should not simply exist—it should be referenced, understood, and incorporated into committee discussions.
Maintaining meeting minutes, documenting reviews, and recording committee decisions alongside the IPS helps establish a thoughtful governance process.
Tip: Keep documentation of annual IPS reviews with your committee meeting materials for future reference.
Final Thoughts
An Investment Policy Statement isn’t intended to eliminate investment risk or predict market outcomes. Instead, it provides a framework for thoughtful oversight, disciplined governance, and consistent decision-making. Regular reviews help ensure the IPS continues to reflect your organization’s objectives, committee structure, and investment oversight process. As your organization evolves, your governance documents should evolve as well. For retirement plan committees, nonprofit organizations, foundations, and institutional investors, reviewing an Investment Policy Statement is not simply a best practice—it is an opportunity to reaffirm a disciplined governance process.
If your retirement plan committee or investment committee hasn’t reviewed its Investment Policy Statement recently, now may be a good time to revisit it.
Redwood Wealth Management Group works with retirement plan sponsors, fiduciary committees, and institutional investors to support investment governance, committee education, and ongoing plan oversight. Schedule a conversation to discuss your committee’s governance process and how regular IPS reviews can help support your long-term objectives.
Redwood Wealth Management Group is affiliated with Almanack Investment Partners, LLC (“Almanack”), an SEC-registered investment adviser. Investment advisory services are offered through Almanack. This content is for informational purposes only and should not be construed as investment, tax, or legal advice. For additional information about our services, please visit https://redwoodwmg.com/disclosures/
