Formalize Investment Strategy

One of our most important responsibilities is writing and maintaining a customized Investment Policy Statement (IPS) for you. The IPS is a fundamental element of any investing plan. Having clearly defined investment strategies in place makes it much simpler to stay on course in terms of achieving your objectives and knowing when to make modifications. Also, a periodic review of the IPS can lead you to explore other financial planning matters that may require attention.

Employee Retirement Income Security Act of 1974 (ERISA)

ERISA is a U.S. federal statute that calls for six practical procedures that fiduciaries should follow. One of these is the creation and maintenance of a written IPS.

Securities and Exchange Commission (SEC)

The SEC requires registered investment advisers (RIAs) to make certain that clients be given investment advice that is suited to their unique situations and financial objectives. The IPS is one way to ensure that proposals are in line with clients’ needs.

Other Benefits

In addition to meeting legal requirements, a clearly written IPS can offer other benefits:

		Maintain consistency and discipline when implementing and monitoring investing strategies
		Make investment decisions practical and emotion-free
		Proffer a base for future investment decisions
		State long-term goals and strategies
		Provide a calming influence in the event of market fluctuations
		Show fiduciary standards reached by your adviser

Investment Policy Statement

The Investment Policy Statement (IPS) should focus on the development and outlook of your unique investment plan. All of the elements of the plan should be outlined, from an explanation of the assets and manager selection to specialized strategies and directions for investing in various arenas.

Investment Policy Statement

Rationale/Conditions

Goals

Investment Strategies

Management Organization

Rules for Investing

Choosing/Overseeing Money

Managers and/or Mutual Funds

Securities Guidelines

Adviser Duties

Client Duties

Benchmarks for Monitoring/Measuring Performance

Implementation Plan

Review Process

Purpose and Background

The first few elements listed in an IPS are an overview of its purpose, investment objectives, and any legal format that regulates your portfolio. Also included in this segment of the IPS is information on:

		The size of your holdings
		The chance of future contributions
		Pending disbursements
		Tax status

Objectives

Along with your personalized goals, there are some other common objectives that you should keep in mind:

		Taking a reasonable amount of risk
		Diversifying sensibly
		Instituting policies tied to total return (for maximum growth)
		Controlling portfolio management/administration costs

Guidelines and Policy

We create guidelines that summarize your own unique investment strategy including:

		Concerns and expectations
		Market uncertainties

Plus your (RATE):

		R Risk Tolerance
		A Asset Classes
		T Time Horizon
		E Expected Return