Understanding Your Investment Policy Statement | Blog | MMA

Understanding Your Investment Policy Statement

Define Your Processs


President, MMA Securities LLC
+1 913 529 3203
April 17, 2018

Employers Continue to Face Uncertainty

Since the market’s bottom in 2009, investors have enjoyed stability, for the most part. The last 9 years have helped to increase investor wealth. 2018, however, has been anything but comfortable and has felt like quite the roller coaster ride.

Regulation, uncertainty, and announcements of new ideas via twitter from the white house have put markets on a wild, daily up-and-down cycle, with markets opening down hundreds of points only to regain in the afternoon!

Regulations: on-again, off-again, on… Employees are asking what it all means

In times like these, companies sponsoring retirement plans may experience higher-than-normal questions and inquiries from employees asking for guidance or to make changes to their accounts.

Although these are questions your plan’s advisor should answer, many employees still turn first to their employer. They want to feel comforted knowing their employer is helping them care for one of their largest assets and nest egg for retirement.

As such, employers should ensure their 401k Committee has a sound due diligence process to review, monitor, and select their plan’s investment lineup.

Proper Plan Governance

Proper plan governance dictates Committees should adopt an Investment Policy Statement. This document assists the Committee in effectively supervising, monitoring and evaluating the management of the retirement plan’s investments.

Among other features, a properly designed Investment Policy Statement should outline the roles and responsibilities of the Committee and Advisor, investment scoring criteria to help determine adequacy of the investments, and the process for changing or removing investment options. This document should be reviewed at least annually, likely during the annual plan review, to ensure the objectives listed are still relevant and feasibly achievable.

In addition, the Committee should conduct a separate due diligence process to select and monitor their Target Date Fund series. The majority of plan assets are likely invested in these funds and their increased complexity results in additional care and attention.

Strategies for Managing the Market

Markets ebb and flow but any uncertainty makes investors nervous. As a company offering a retirement plan, you can reduce employee stress by having a defined and written process to monitoring and selecting your plan’s investment lineup. If you don’t have one today, adopt an Investment Policy Statement.  

Talk With Marsh & McLennan

Marsh & McLennan Agency helps our customers determine how to construct investment policy statements, what should be included and how to communicate to employees. Talk with your Marsh & McLennan Agency representative to get more information.

Securities offered through MMA Securities LLC (MMA Securities), member FINRA / SIPC, and a federally registered investment advisor. Main Office: 1166 Avenue of the Americas, New York, NY 10036. Phone: (212) 345-5000. Variable insurance products distributed by MMA Securities LLC.  MMA and MMA Securities are affiliates owned by Marsh & McLennan Companies.