An investment policy statement is a written document setting out a client's objectives, constraints, target allocation, and the rules that govern how the portfolio is managed and reviewed.
The value of an IPS comes from being agreed in calm conditions. It records what was decided and why, at a time when nobody was reacting to anything.
Objectives and time horizon. Target allocation and permitted ranges. Rebalancing rules. Constraints, including restricted securities and liquidity needs. How and when it gets reviewed.
The difficult conversation in a decline. When a client wants to abandon the plan, the IPS makes the discussion about a document you both agreed rather than about who is right now.
It does not stop anyone doing anything. The client can always overrule it. But it changes the conversation from an argument into a decision to depart from something.
A boilerplate IPS that nobody read. If it does not reflect this client's actual circumstances, it is a filing artefact, and it will be useless in exactly the moment it was written for.
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