The first section you can expect in a Word document template for an investment policy statement is the purpose of the statement. This section shows why the IPS was written, as well as the different sections that are covered in the IPS. For example, if it is an investment statement of the pension plan or a statement of the trust fund`s investment policy, this section will indicate whether you are the trustee of a pension plan or an individual investor, one of the most important steps you can take in your investment planning process is to create an Investment Policy Statement (IPS). An IPS defines your goals and guidelines for your investment activity, and some even consider it their business plan to make critical decisions. Most importantly, it provides discipline. · risks related to the manager`s operations, people and processes; and In a postmodern portfolio theory environment, the IPS serves as the cornerstone of a quantitative portfolio construction process: all opinions contained in this document represent the Company`s judgment at the time of publication of this document and are subject to change without notice. This material was not prepared by the research departments of Morgan Stanley & Co. LLC or Morgan Stanley Smith Barney LLC. Some historical figures may be revised due to newly identified programmes, fixed reformulations, etc.
In addition to establishing the investor`s investment goals, priorities, and preferences, a well-thought-out IPS establishes a systematic review process that allows the investor to focus on long-term goals, even if the market fluctuates significantly in the short term. It should include all current account information, current allocation, accumulated amount and amount currently invested in different accounts. While the Statement of Investment Policy is a living document, investment policies and guidelines are not expected to change frequently. For example, short-term changes in the market should not require adaptation of the document. First of all, IPS helps protect against mistakes and misdeeds when managing a portfolio. If the investment portfolio statement is well formulated, it will include concrete provisions that will help the advisor discourage clients from taking drastic measures that can be detrimental to their portfolio if the market shows signs of weakness. At ICC, we create an investment policy statement for EACH CLIENT. No exceptions. As fiduciary investment advisors, we believe it is part of the role of putting your interests first. An important advantage of a well-written investment policy statement is that it can help maintain the relationship between institutions when there are fluctuations between the individuals involved.
Let`s take the example of the board of directors of a client whose composition changes every few years. The document can serve as a guide and help new people quickly become familiar with investment policy. For financial advisors, the first reason an IPS is important is to comply with the fiduciary process. As trustees, financial advisors are expected to provide the best possible financial advice and are even required by law. In the event of a dispute, the financial advisor must prove that he or she has acted as a trustee. However, the answer will not come from the investment results, but from the decision-making process behind the measures taken. The financial advisor must prove the process he followed, that the process was in the best interest of his client and that his actions are in the best interests of his client. It is difficult, if not impossible, for a trustee to prove that he or she cared about the best interests of the client without a plan. However, with an IPS, the trustee can demonstrate that they worked in the best interests of the client, even if the investment results did not go as planned.
Certain information contained herein may constitute forward-looking statements. Due to various risks and uncertainties, the actual events, results or performance of a fund may differ materially from those expressed or contemplated in such forward-looking statements. An Investment Policy Statement (IPS) is a written statement designed to provide a framework for a plan`s investment trustees to make decisions regarding different types or classes of plan investments. Typically, an IPS describes the roles of the parties involved in the planned investment process and describes their investment responsibilities. Although an Employee Retirement Income Security Act (EMPLOYEESA) pension plan is not required to have an SPI, it is generally considered a best practice to have one. This section is short and sets out the main objective that the financial advisor and client want to achieve. For example, if the objective was to build a bond portfolio, the IPS could be an investment policy of 401,000. There`s another important reason to insist on an IPS – a reason most investors don`t even think about. It can also protect you from a problem advisor. How does she do it? First, a good IPS should include strategies, monitoring and control procedures that can be followed by anyone involved in the process of managing your money. .