A fiduciary demonstrates prudence by the process through which investment decisions are managed, rather than by showing that investment products and techniques are chosen because they were labeled as “prudent.” Most investments are not imprudent on their face. It is the way they used, and how decisions as to their use are made, that will be examined to determine whether the prudence standard has been met. Even the most aggressive and unconventional investment can meet that standard if arrived at through a sound process, while the most conservative and traditional one may not measure up if a sound
process is lacking.

1. Analyze Current Plan
   • Plan is managed according to the laws (ERISA, DOL) and IPS
   • Fiduciaries are aware of their duties and put that in writing
   • All service agreements and contracts are in writing and conflict free
2. Diversify-Allocate Portfolios
   • Identify Participant risk levels and time horizons
   • Explain historical performance for various asset classes
   • Conduct retirement asset projections using assumed returns
   • Develop investment models for various risk levels-5
3. Formalize Investment Policies
   • Defines duties and responsibilities of all parties involved
   • Defines diversification and rebalancing guidelines
   • Defines due diligence for selection investment managers
   • Defines monitoring criteria for investment managers and service vendors
   • Defines procedures for controlling and accounting for investment expenses
   • Established intent to comply with Section 404-c
4. Implement Investment Policies
   • Investment program is implemented using fiduciary prudence
   • Have advisory firm acknowledge co-fiduciary status in writing
   • Due diligence is followed in selecting service providers, including the custodian
5. Monitor and Supervise
   • Periodic reports comparing investment performance against appropriate index, peer group and IPS objectives
   • Control procedures are in place to periodically review policies for best execution, soft dollars, and proxy voting
   • Fees for investment management are consistent with agreements and the law
   • Commissions, 12b-1 fees or asset management fees are appropriately applied, utilized and documented

IPS Definition: A written document with the purpose of providing meaningful direction and guidance for trustees and investment professionals regarding the selection and management of investment assets based on established and documented investment goals and objectives. When used properly, it can limit liability, provide consistency, and set expectations for investment performance.