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Statement of Investment Policy

Under ERISA, the onus of managing a portfolio requires a trustee to do so with the facility and understanding of a prudent expert. Because a trustee is held to a very high standard of conduct, federal legislation and case law encourages a trustee to delegate these responsibilities to qualified professionals in order to secure statutory relief of their personal liability under ERISA 405(d)-1. However, the mere delegation of investment authority is not a sufficient condition for claiming this statutory relief. Among other requirements, trustees must routinely review the performance of the advisor to whom investment authority was delegated. The Statement of Investment Policy, or SIP, is the framework around which this review takes place.

The SIP can demonstrate that a trustee followed a prudent course in initially delegating investment responsibility, gave clear and concise instructions for the management of the portfolio, and has a methodology for the proper review of the performance of the portfolio's advisor-all necessary conditions for claiming statutory relief from the liability associated with investment decisions.

Heintzberger | Payne Advisors either reviews an existing SIP and makes recommendations for changes, if any, or helps the client create a SIP.

Objectives

A SIP must clearly express the investment objectives of the portfolio:

  • What amount of return is the portfolio expected to yield?
  • Over what period of time? How much investment risk will be tolerated?
  • Are some types of investments not acceptable for purchase?
  • Are there minimum and maximum exposures to various assets classes?
  • What are the benchmarks against which investment performance will be measured?