From the course: Portfolio Management for Retail Clients
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Drafting an investment policy statement (IPS) - Part 1
From the course: Portfolio Management for Retail Clients
Drafting an investment policy statement (IPS) - Part 1
The next piece of the puzzle in portfolio management is drafting an investment policy statement, or an IPS. An IPS is a document that is written by the advisor with input from their client that's often legally binding and outlines the general rules that the advisor must adhere to when managing the client's portfolio. The way investment policy statements are written can differ considerably from situation to situation depending on a number of factors, including the amount of leeway that the client is comfortable giving to their discretionary advisor. Let me explain that a bit further. As a discretionary portfolio manager, it is mandatory that you create and maintain an investment policy statement with each and every one of your discretionary clients. An IPS will usually dictate which of the client's accounts are included in the agreement, the target weight of each asset class, and other types of management rules and portfolio restrictions, the specifics of which we'll discuss throughout…
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