Insights from the experts in investment fiduciary responsibility.

Fiduciary Links: The IPS is the crucial fiduciary document

Posted by fi360 Team on October 28, 2013

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>>>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.  

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