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Investment Policy Statement
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Investment Policy Statement

Prior to making any investment decisions, it is important we establish an Investment Policy Statement (IPS) for your investments. The IPS is used by pension funds, foundations and any disciplined investor looking to outline a systematic investment process that will guide them in their investment decision-making. Once we establish your personal IPS, there are many investment vehicles available.

More detailed than a New Client Application form, an IPS is a plan that guides long-term financial and investment decisions. It generally includes investment objectives (return requirements and risk tolerance), constraints (cash requirements and timing issues) and guidelines for achieving an investor's objectives.

The Investment Policy Statement is the core of your investment strategy. It embodies your current financial situation, what you hope to achieve in the future, and your attitude toward risk. It is your assurance that your assets will be prudently managed, in keeping with your expressed goals and objectives.

Why We Use an IPS

It helps us understand and document your present circumstances, short-term goals and long-term dreams. An IPS can be used to set your intermediate goals or your personal financial benchmarks. This will help you recognize how you are achieving your goals. In tough times, the IPS can be used to help you focus on your long term goals rather than the short-term volatility.

IPS documents start with a series of questions for us to discuss with you, our client.

Sample IPS Questions

• What is your personal (and family) financial situation?
• What are your financial goals and objectives? What are you investing for?
• Are you providing for dependents?
• When do you anticipate requiring income from your portfolio?
• What is your philosophy about risk, diversification and taxes?
• Are you comfortable with a moderate rate of return or are you looking for the higher returns which more aggressive investments may provide?
• How much of a loss can you accept over a three-month, one-year or five-year period?
• How would you react if your portfolio beat the indexes during bad times, but trailed the top performers when markets were strong?
• Do you have any ethical restrictions on your investment choices?
• How do you define investment success?