Investment Policy Statement

During the month of January, three+one is publishing a five-week Winter Blog Series to discuss the five different categories of our cashVest® score. Every three+one liquidity analysis includes a cashVest score to establish a baseline going forward. It has been demonstrated, time and again, that if an entity follows our recommendations in each of the five categories, and a higher cashVest score is achieved, the more money an entity will earn on their low- and non-performing cash.

This week will highlight our fifth category:

Investment Policy Statement:

 Investment Policy Statement

 

An Investment Policy Statement (IPS) is the very foundation of an entity’s approach to maximizing the value of its operating and non-operating cash. That is why it is such an integral part of the regular cashVest reporting service. Keeping your policy up to date regarding regulations and the marketplace is just as important as understanding the opportunities and safeguards that an IPS puts in place.

Here are some guidelines and recommendations you should find helpful when reviewing or designing an IPS.

1.) An IPS should provide enough structure for both the entity and third parties to have a clear understanding of what is or is not permitted, both internally as well as externally by your bank(s) and/or Register Investment Advisor (RIA).

2.) An IPS should truly reflect your entity and be tailored to its specific needs. It should also reflect any limitations for which your entity is accountable.

3.) Your IPS should be updated and/or reaffirmed annually through a systematic process. If you are comfortable with your policy and feel it is serving you well, then simply reaffirm it. If you feel it needs an overhaul, then do so, but then share the revised IPS with all of your financial-institution partners.

4.) Don’t hesitate to seek help from us at three+one, entities similar to yours, and/or financial, accounting and other third-party partners.

5.) It is important to remember that an IPS should address the investment of operating cash and differentiate from long-term funds; for example, endowment vs. capital funds. Short-term liquidity should reflect the ability to access cash so it is not left unattended, but rather available at a moment’s notice.

6.) Once your IPS is constructed or reaffirmed, you should have your legal counsel review and approve it.

At three+one, we have many templates for you to review and use as a framework to personalize and reflect the specific needs of your entity or institution.

As this five-week winter blog series come to a close, it is my hope that you have a better understanding of three+one’s cashVest score and the five key elements that make up the score.  It has been proven that if you follow all five criteria and principles of three+one’s  cashVest score,  your organization will realize an immediate increase in revenue.

If you have questions or wish like to receive more information on our services, please visit threeplusone.us.

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