1. Lack of a proper investment policy statement:
The Investment Policy Statement, or “IPS” is like the architect’s plans for the building of the house. Before engaging a subcontractor to build the basement, you need to know how big a basement it is that you need.
2. Not identifying all fiduciaries:
Board members, trustees and senior staff are not the only trustees who must acknowledge their responsibility. Co-trustees can be advisors or custodians who share the responsibility. Don’t forget, fiduciaries can be held individually liable and may not be protected by standard insurance policies.
3. Inadequate due diligence process:
While fiduciaries are rarely held responsible for poor investment performance, fiduciaries can be held liable for failure to follow best practices. Being able to demonstrate a proper due diligence process can go a long way towards mitigating such liability.
4. Failure to monitor all costs:
Plan sponsors have paid out hundreds of millions in fines and settlement costs after being sited for not periodically assessing the relative costs of their vendors.
5. Failure to continuously monitor all aspects of their plan:
The recent United States Supreme Court ruling in Tibble vs. Edision made it clear: periodic reviews are not enough by themselves. Fiduciaries must continuously monitor all aspects of their funds.