Step One to Fiduciary
April 10, 2009
This article originally appeared on Inside Information. Used with permission.
Inside Information ~ Filed Under Practice Management, February 2007
Bob Veres, Publisher, Inside Information
“The definitive tool for creating investment policy statements is back — and a LOT more powerful than the earlier version.”
If we’re moving into a fiduciary world, then it seems likely that, eventually, clients will receive some kind of investment policy statement from their advisors — just like qualified plans do, by law, from THEIR advisors today. And why not? The IPS clarifies the purpose of the portfolio, defines how it will be managed, and (most importantly) it becomes something you can come back to if the client starts asking why you weren’t more heavily weighted in emerging markets funds or REITS following some kind of freakish runup. From a compliance standpoint, it creates a clear record of the investment agreement between advisor and client. Wealthier clients like the idea that their assets are being given the same treatment as large pension plans. And if you do decide to manage a client’s 401(k) plan, you need to have an IPS to define the relationship. Read more
A Software Solution to Investment Policy Statements
April 10, 2009
This article originally appeared on MorningstarAdvisor.com. Used with permission.
Joel Bruckenstein, CFP
It has been a long wait, a very long wait, but IPS AdvisorPro® is finally here. This Web-based application that creates investment policy statements was developed by two prominent, highly gifted financial planning professionals, Norm Boone and Linda Lubitz.
Boone is founder and principal of Mosaic Financial Partners in San Francisco. He has been cited by numerous periodicals as one of the best financial planners in the country. Boone has served on the National Board of the Financial Planning Association, the TIAA-CREF Institutional Advisory Board, and the advisory council for Schwab Institutional. His articles have appeared in CCH’s Journal of Retirement Planning, Journal of Financial Planning, and Wealth Manager. Read more
On the Same Page
April 9, 2009
By Ingrid Case, First published January 1, 2009.
Investment policy statements (IPSs), viewed as protective by some advisors and potentially hazardous by others, are getting more attention in this transformed market.
An IPS is a document that explicitly outlines the goals and philosophy of investing for a given client, setting general preferences. Users regard IPSs as an effective tool for keeping planners and clients on the same page, guiding the planner’s efforts and keeping the client’s expectations reasonable and realistic. Now that the markets are in turmoil, there’s more focus on the rationale underlying IPSs.
Many planners use IPSs with certain of their clients, particularly institutional, high-net-worth or highly argumentative clients. Few, however, use IPSs with the majority of their clients, especially when times are good. Read more
Getting Comfortable With Change
April 7, 2009
Norm Boone, MBA, CFP®
As an active proponent of investment policy statements, I have frequent opportunities to speak with advisors about the how and why of using this tool in their practice. While most recognize an IPS’s potential benefits, one question is often raised. “Wouldn’t it be risky to start using IPSs? My clients would wonder why, all of a sudden, I’m using this tool when I’d never mentioned it before. They might question my motivation and lose confidence in me.”
It’s true that change is often challenging for clients. But the fact is that change is constant. In our business, the market fluctuates and there are constant changes in the client’s situation. We also have internal changes in our firms that must be communicated to clients. Still, far too many advisors use their clients as an excuse for not making needed changes. Here are some communication tips for introducing change to your clients: Read more
Adviser Services 411
April 7, 2009
Bob Veres, Publisher, Inside Information
It has taken 30 years, but the financial planning profession has finally evolved a rich and diverse ecology of support services that address virtually every practice need. The trouble is, there isn’t any handy telephone book to help you find what you’re looking for.
Until this column, that is. My goal is to provide names and web (or email) addresses for some of the very best services, consultants and information resources that I’ve come across in my 23-plus years of roaming around the industry. Whatever you need, chances are it’s out there, and you’ll be grateful when you find it. [Ed's note: Some of these services and contacts will be available through Financial Planning's AdvisorMax.com, launching in November. It will be a comprehensive source of information, research and practice management tools for planners.] Read more
Put It in Writing – Practice Management
April 7, 2009
By Norman Boone and Linda Lubitz Boone. First published November 1, 2008.
A PDF version of this article can be downloaded here (1 mb).
Bank advisors have lots of reasons to avoid writing investment policy statements (IPS). They’ll say:
- “It takes too much time to go over all the issues with my client and then write an IPS, and get my client to read and approve it.”
- “Clients expect me to start managing their money right away, so it doesn’t make sense for me to delay just to write an IPS.”
- “I’m afraid that by writing an IPS, I’m just giving my client the tools with which to sue me. In fact, my attorney tells me not to put anything in writing if I can avoid it.”
- “My broker-dealer doesn’t allow me to write an IPS.”
- “I like the idea of an IPS, but I’m not sure how to explain the process to my clients or what should go into it.”
This article will address these concerns with an eye toward helping you successfully adopt IPSs as part of what is increasingly considered a “best practice” in the investment world. In these frightening markets it might be particularly helpful to have such a document to refer to. Read more
Investment Policy Statements – A White Paper from the Profit Sharing/401k Council of America
April 6, 2009
Introduction
ERISA states that plans must “provide a procedure for establishing and carrying out a funding policy in a method consistent with the objectives of the plan.” This has been interpreted to mean that qualified retirement plans, including defined contribution plans, should have established procedures for plan investment-related decision making.
Approximately half of defined contribution plan sponsors have described their investment decision making procedures in a written form called an investment policy statement, according to studies by PSCA, Hewitt Associates and BARRA Rogers Casey. This contrasts with the situation for defined benefit plans where such investment policy statements are practically universal. PSCA believes that adoption of a formal investment policy process, and documenting that process, will assist sponsors in the prudent management of their defined contribution plan assets and will help them avoid fiduciary liability.
It is the purpose of this paper to provide plan sponsors with the advantages and disadvantages of adopting a written description of the investment process for their defined contribution plans. It also provides a discussion of what might be included should they choose to implement an investment policy statement. An example of an investment policy statement is attached. Read more
Save Valuable Time: Import Financial Plan Data into Investment Policy Statements
April 3, 2009
MoneyGuidePro™ is a client-centered Financial Planning and Retirement Planning Software for fast and easy Goal Planning, Insurance Needs Analysis, Asset Allocation, and Estate Planning. It is intuitive and easy to use, while still providing sophisticated analyses and results. Like IPS AdvisorPro®, MoneyGuidePro™ is completely web-based and features online collaborative planning between advisors and clients.
Now you can save time and streamline the preparation of financial plans and investment policy statements (IPS) ensuring consistency of data between the two programs and providing financial advisors with a complete financial and investment planning solution.
Focus Financial Group, LLC
April 3, 2009
How an Independent Financial and Investment Planning Firm Utilizes Investment Policy Statements as a Point of Reference and to Maintain Their Standard of Excellence in Client Services and Education. Read more
Shareholders Service Group
April 3, 2009
How a Leading Custodian Adds Value to Their Advisor Clients through Investment Policy Statements. Read more
Harris myCFO Investment Advisory Services, LLC
April 2, 2009
How a Leading Wealth Manager Enhances Their Service Offering Through Investment Policy Statements. Read more
