A plan’s investment policy is an important first step in establishing guidelines for plan Trustees to select investment options for the plan. This investment policy typically documents procedures for selecting, monitoring, and evaluating investment options. However, the Trustee’s fiduciary responsibility does not end once this policy is established. Continuous monitoring is necessary to determine that the plan is invested in investments that are in the best interest of plan participants.
Investment options have greatly expanded and diversified over time and plan Trustees are presented with more decisions. As Trustees select new investments, they should be aware if the investment selection is in accordance with the plan’s investment policy and if it meets the criteria of being in the best interest of plan participants.
A good way for plan Trustees to monitor investments is to meet with the investment consultant on a regular basis to discuss the plan’s investment performance, review investments against benchmarks, and determine if any revisions are necessary to the policy. All investment decisions should be documented in the minutes of the Board of Trustees meetings. Documentation of investment decisions and revised investment policies are crucial to demonstrate that the Trustees have been prudent in making investment decisions.
In Conclusion
Trustees, as plan fiduciaries, are ultimately responsible for making decisions in the best interest of plan participants. They should use the role of fiduciary to adequately monitor investments for quality and consider the fees charged to the plan for investments selected. These decisions should be guided by an investment policy and documented in the Board of Trustees meeting minutes.
By: Aaron K. Plath, CPA | Manager
