Education Policy Statements – Rising Above the Crowd

Most DC plans do not even have an Investment Policy Statement (IPS), which is debatedly required. So do we need another document that could potentially create liability? The answer is laid out brilliantly in a Transamerica Retirement Solutions white paper: a resounding “Yes.” In a compelling case for creating an Education Policy Statement (EPS), Transamerica’s white paper lays out the basic and somewhat obvious drivers:
• Most employees are not ready to retire comfortably at 65;
• Most are not financially literate; and
• Many are not engaged or confident in their abilities.
Advisors that have a well-designed EPS will distinguish themselves above the "Triple F" advisors — those concentrated on fees, funds and fiduciary — by positioning themselves as focused on outcomes and laying the foundation for success. This foundation includes participation and deferral rates, account balances, asset allocation and financial literacy. Transamerica points out that an EPS is not required under ERISA, but it can provide cover for plan sponsors by demonstrating their commitment and engagement to their DC plans without creating liability like the IPS does.