Can a Fiduciary be prudent without a Statement of Investment Policy?
Emphatically no. Fiduciaries must articulate what the objectives are for the retirement plan, what amounts to success in meeting those objectives, what risks are or are not appropriate to take, and ultimately what broad investment strategy or strategies should be offered to plan participants and beneficiaries.
A written Statement of Investment Policy (SIP) is an essential document for trustees to formalize their decisions regarding the investment of plan assets and provides the basis for prudent oversight of and adjustment in the execution of the investment strategy over time.
A Statement of Investment Policy (SIP) should set forth the authority and control an investment manager has over Plan assets.
Particularly for 404(c) Plans in which investment alternatives are identified, the SIP should establish the criteria for identifying and maintaining a mutual fund that is an investment alternative.
The SIP should identify expectations for performance and the benchmarks against which performance shall be measured.