Examining the Use of Investment Policy Statements

The most important duty of the fiduciary
or trustee is the development and
ongoing maintenance of an investment
policy statement (IPS). A good, well communicated
IPS can go a long way
in preventing disaster,provided all concerned
actually read and understand
it. It is not the responsibility of the
fiduciary to follow every tic of the
stock market, but it is his or her duty
to understand everything in the IPS: if
one doesn’t understand it, it shouldn’t
be there.

—Trone, Allbright, and Taylor [1996]