Fiduciary Links: The IPS is the crucial fiduciary document
Posted by fi360 Team on October 28, 2013
>>>As you may have already heard, fi360 recently acquired IPS AdvisorPro, a cloud-based technology for building and maintaining investment policy statements. We obviously feel very strongly about the technology from a business perspective, but another key consideration to the acquisition was how strongly it fits from a fiduciary perspective. If you’ve ever taken an fi360 training course, you know that we regard the construction and implementation of an IPS as arguably the most important function a fiduciary performs. It forms the basis for all investment decision-making going forward and helps direct and maintain the consistency that is at the heart of a prudent investment process. It is from this perspective that fi360 CEO Blaine Aikin wrote his most recent Fiduciary Corner column for InvestmentNews.
In his column, Blaine looks at a survey of advisors from Russell Investments that indicates the majority of advisors are not implementing an IPS with all of their clients. This is an industry-wide problem with negative consequences to both the advisors not using an IPS and their clients. To understand those consequences, you have to look no further than another finding of the survey that shows an equal majority of advisors regularly face clients who direct them to deviate from the investment plan. Without a central document serving as a guide and reminder for the purpose and process of a portfolio, it is much more difficult to correct this type of bad investor behavior. This is surely a problem encountered by most, if not all, of the advisors reading this post. Clients who stick to the strategic course are better positioned to achieve their desired outcomes, which is also a good outcome for the advisor, who ends up with more satisfied, loyal clients who have more assets to be managed.
Read Blaine’s column for his take on why the reasons many advisors resist the IPS are actually counterproductive.
Now on to the rest of the week's best links:
News and columns from the leading trade, consumer, and mainstream media:
- Bill to kill SEC, DOL fiduciary rules heads for house vote. [ThinkAdvisor]
- Does Gen Y even have any money? [InvestmentNews]
- Without a net. [Wealth Management]
- 401(k) Plan Management. [InvestmentNews]
- DC plans still hesitant about lifetime income. [Pensions & Investments]
From the organizations/associations/government/academia:
- Here's a handy comparison guide for 401(k) and 403(b) plans [McKay Hochman]
- A world without commissions. [NAPA Net]
- FINRA requests comment on proposed funding portal rules and related forms. [FINRA]
- Studies show financial education has little impact on behavior. [NAPA Net]
From the blogs:
- Risk management, due diligence, and fiduciary delegation [Pension Risk Matters]
- A nice interview of friend-of-fi360 Roger Wohlner by another friend, Chris Carosa. Touching on a number of trending topics for retirement plan fiduciaries. [Fiduciary News]
- Will monthly retainers be the next big business model in financial planning? [Nerd's Eye View]
- Trending topics for ERISA plan sponsors. [Fiduciary News]
- Exclusive Interview with Roger Wohlner: on annuities, target date funds and the fiduciary standard. [Fiduciary News]
- Mary Beth Frankling does a follow up mailbag on Social Security claiming strategies [IN's Retirement 2.0]
Articles your clients are reading (or should be):
- 3 strategies to generate wealth (not to be confused with income.) [U.S. News]
- The 4 percent safe withdrawal rule declines to 3 percent. [U.S. News]
- Study: Financial stress dramatically lowers your IQ. [U.S. News]
- How to handle a 401(k) fund change. [U.S. News]
