An Investment Policy Statement (IPS) is a document that outlines a prudent and acceptable investment philosophy which supports your long term goals. The IPS enables you to maintain a long-term, disciplined, and systematic approach. This approach will help you increase the probability of meeting your investment goals.
The steps taken when developing your IPS:
- Assess your financial situation
- Determine your time horizon
- Determine your risk tolerance
- Develop objectives for your portfolio
- Identify any restrictions on your portfolio
- Determine an appropriate asset class mix
- Determine an ongoing methodology of manager selection, rebalancing, and communication
- Implement the policy
- Review and monitor the policy
The Investment Policy Statement is not a contract, but rather a guide for you and your Advisor. It is best used as a working document that is reviewed and revised periodically to reflect any changes in your goals and circumstances or the capital markets.