Investment Policy Statements What are they? Why are they important?
Provided by Walter Roop CLU, RHU
A self-fulfilling policy. An investment policy statement (IPS) is a document which helps the client and advisor stay “on the same page” by clearly stating the expectations and responsibilities of the client and advisor.
A standard IPS will usually take into account the client’s general investment goals and objectives, but also more specific elements, such as a breakdown of asset allocation targets, any control and monitoring procedures to be followed by everyone involved in the portfolio, and concrete procedures for making any future changes to the IPS.1
Read the fine print. Because an IPS includes your broad investing goals and objectives, it’s important to read through it fully. For some, it may be helpful to think of an IPS as a way for you to communicate with your advisor, even if you’re unable to be reached. This may also be helpful when quick action is necessary.
That’s because an IPS sets the parameters within which the advisor will operate in order to help you reach a set of preestablished goals. So, if during your read through of an IPS anything feels uncomfortable, a conversation with your advisor is a great idea.
Invest in a conversation. An IPS is a great way to make sure you’re with a professional who understands your risk tolerance, goals, and time horizon. After all, an investment policy statement can be deeply personal and works best when tailored to your circumstances. However, if you happen to find an element of your IPS that doesn’t fit exactly right, don’t despair. A conversation with a financial professional can often help create an investment statement that’s as unique as your portfolio may be.
Walter Roop may be reached at 901-683-4030 or firstname.lastname@example.org.
* Walter Roop is an Investment Advisor Representatives of, and securities and Investment Advisory Services offered through Woodbury Financial Services, Inc., PO Box 64284, St. Paul, MN 55164. 800-800-2638 Member FINRA, SIPC, and Registered Investment Advisor. Roop Financial Services, Inc. and Woodbury Financial Services Inc. are not affiliated entities. Nothing contained herein is to be considered tax or legal advice. Neither Walter Roop, Woodbury Financial Services, nor Roop Financial Services, offer tax or legal advice. Tax and/or legal advice should be obtained from a professional duly licensed to provide such services.
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
1 - cfainstitute.org/membership/professional-development/refresher-readings/2018/the-portfolio-management-process-and-the-investment-policy-statement [06/18/2019]