Boost your investing strategy with our comprehensive Investment Policy Statement Checklist, prioritizing client objectives, risk tolerance, and financial goals.
1
Identify the client's investment goals and objectives
2
Assess the client's risk tolerance
3
Determine the time horizon for investment
4
Development of the client's investment profile
5
Approval: Client Profile
6
Choose appropriate asset classes accordance with client's risk tolerance
7
Establish strategic asset allocation
8
Determine portfolio rebalancing frequency
9
Assess liquidity requirements
10
Define benchmarks for performance measurement
11
Prepare draft of Investment Policy Statement (IPS)
12
Approval: Draft of IPS
13
Present IPS to client for feedback
14
Make changes according to client feedback
15
Approval: IPS changes
16
Finalize the Investment Policy Statement (IPS)
17
Obtain client's signature on finalized IPS
18
Keep a copy of signed IPS for records
19
Conduct regular reviews of the IPS to ensure it is still aligned with client's goals
Identify the client's investment goals and objectives
This task involves understanding the client's financial aspirations and objectives. The aim is to determine what the client wishes to achieve through their investments and tailor the investment strategy accordingly. Consider asking questions like: What are your long-term financial goals? Are you looking to save for retirement, education, or a major purchase? The desired outcome is to have a clear understanding of the client's investment goals and objectives.
Assess the client's risk tolerance
In this task, we assess the client's risk tolerance level. It is important to gauge how comfortable the client is with taking risks when investing. By understanding their risk tolerance, we can ensure that the investment strategy is aligned with their preferences and objectives. Consider asking questions such as: How comfortable are you with investment volatility? Are you willing to accept short-term losses for potential long-term gains? The goal is to determine the client's risk tolerance level.
1
Conservative
2
Moderate
3
Aggressive
Determine the time horizon for investment
This task involves determining the client's time horizon for investment. It is important to understand how long the client intends to hold their investments before needing to access the funds. This information helps in selecting appropriate investment strategies and asset classes. Consider asking questions like: When do you anticipate needing the funds? Is it a short-term, medium-term, or long-term investment? The desired outcome is to have a clear understanding of the client's time horizon for investment.
1
Short-term (1-3 years)
2
Medium-term (3-5 years)
3
Long-term (5+ years)
Development of the client's investment profile
This task involves developing the client's investment profile based on the gathered information about their goals, risk tolerance, and time horizon. The investment profile helps in determining the appropriate investment strategy and asset allocation. Consider asking questions such as: Based on your goals, risk tolerance, and time horizon, what type of investments do you prefer? How important is capital preservation to you? The goal is to create a comprehensive investment profile for the client.
Approval: Client Profile
Will be submitted for approval:
Development of the client's investment profile
Will be submitted
Choose appropriate asset classes accordance with client's risk tolerance
In this task, we select appropriate asset classes based on the client's risk tolerance level. It is essential to match the client's risk tolerance with suitable investments to ensure their comfort and alignment with their goals. Consider asking questions such as: Which asset class(es) are you most comfortable investing in? How much exposure to equities are you willing to have? The desired outcome is to determine the most appropriate asset classes for the client's risk tolerance.
1
Equities
2
Bonds
3
Real estate
4
Cash
5
Commodities
Establish strategic asset allocation
This task involves establishing the strategic asset allocation for the client's portfolio. It entails determining the optimal mix of asset classes based on factors such as the client's risk tolerance, time horizon, and investment goals. Consider asking questions like: What percentage of your portfolio would you like to allocate to each asset class? How important is diversification to you? The goal is to determine the strategic asset allocation that aligns with the client's investment objectives.
1
0-20% equities, 80-100% bonds
2
20-40% equities, 60-80% bonds
3
40-60% equities, 40-60% bonds
4
60-80% equities, 20-40% bonds
5
80-100% equities, 0-20% bonds
Determine portfolio rebalancing frequency
In this task, we determine the frequency at which the client's portfolio will be rebalanced. Rebalancing involves adjusting the portfolio's asset allocation to bring it back in line with the strategic allocation. Consider asking questions such as: How often would you like your portfolio to be rebalanced? Are you comfortable with a more frequent rebalancing strategy? The desired outcome is to establish the appropriate rebalancing frequency based on the client's preferences and investment strategy.
1
Annually
2
Biannually
3
Quarterly
4
Monthly
5
As needed
Assess liquidity requirements
This task involves assessing the client's liquidity requirements. It is crucial to understand the client's need for immediate access to their invested funds. Consider asking questions such as: Do you anticipate needing to access your funds in the near future? How important is liquidity to you? The goal is to determine the client's liquidity requirements and consider them when crafting the investment strategy.
1
High liquidity
2
Moderate liquidity
3
Low liquidity
Define benchmarks for performance measurement
In this task, we define the benchmarks that will be used to measure the performance of the client's investments. Benchmarks provide a benchmark against which the investment performance can be evaluated. Consider asking questions such as: What benchmark(s) do you prefer to use for performance measurement? What index or indices align with your investment goals? The desired outcome is to establish appropriate benchmarks for performance measurement.
1
S&P 500
2
MSCI World
3
Barclays US Aggregate Bond Index
4
FTSE 100
5
Russell 2000
Prepare draft of Investment Policy Statement (IPS)
In this task, we prepare a draft of the Investment Policy Statement (IPS) based on the gathered information. The IPS outlines the client's investment objectives, risk tolerance, asset allocation, rebalancing strategy, and other key details. Consider asking questions like: Is there any specific information you would like to include in the IPS? Do you have any preferences for the structure or format of the IPS? The goal is to create a comprehensive draft of the IPS.
Approval: Draft of IPS
Will be submitted for approval:
Prepare draft of Investment Policy Statement (IPS)
Will be submitted
Present IPS to client for feedback
This task involves presenting the draft of the Investment Policy Statement (IPS) to the client for their review and feedback. It is important to gather the client's input and ensure that the IPS accurately reflects their investment goals and preferences. Consider asking questions such as: Are there any changes or additions you would like to make to the IPS? Do you have any concerns or questions about the proposed investment strategy? The desired outcome is to receive feedback from the client regarding the draft IPS.
Make changes according to client feedback
This task involves incorporating the client's feedback into the draft Investment Policy Statement (IPS). It is crucial to address any concerns or requests the client may have and ensure that the IPS accurately reflects their preferences. Consider asking questions such as: Which specific changes would you like to make to the IPS? Are there any additional elements you would like to include? The goal is to revise the draft IPS based on the client's feedback.
Approval: IPS changes
Will be submitted for approval:
Present IPS to client for feedback
Will be submitted
Make changes according to client feedback
Will be submitted
Finalize the Investment Policy Statement (IPS)
In this task, we finalize the Investment Policy Statement (IPS) based on the revised version. It involves ensuring that all necessary changes have been incorporated and that the IPS accurately reflects the client's investment goals and preferences. Consider asking questions like: Are you satisfied with the revised IPS? Do you have any further changes or additions? The desired outcome is to have a finalized version of the IPS ready for the client's signature.
Obtain client's signature on finalized IPS
This task involves obtaining the client's signature on the finalized Investment Policy Statement (IPS). The client's signature confirms their agreement with the investment strategy outlined in the IPS. Consider asking questions such as: Are you ready to sign the finalized IPS? Do you have any questions or concerns before signing? The goal is to obtain the client's signature on the IPS.
Keep a copy of signed IPS for records
In this task, we keep a copy of the signed Investment Policy Statement (IPS) for records. It is important to maintain a record of the signed IPS for future reference and compliance purposes. Consider asking questions such as: Where would you like us to store a copy of the signed IPS? Do you have any specific requirements for record-keeping? The desired outcome is to have a copy of the signed IPS securely stored for record-keeping.
Conduct regular reviews of the IPS to ensure it is still aligned with client's goals
This task involves conducting regular reviews of the Investment Policy Statement (IPS) to ensure that it remains aligned with the client's goals and preferences. Regular reviews help in assessing the performance of the portfolio and making any necessary adjustments. Consider asking questions like: How frequently would you like to review the IPS? Are there any specific factors or events that would trigger a review? The goal is to conduct periodic reviews of the IPS to ensure its ongoing alignment with the client's goals.
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