After determining an appropriate asset allocation, we draft the Investment Policy Statement (IPS) to document the plan for the portfolio. The IPS is tailored to each client’s unique needs and circumstances. It addresses cash flow needs and expectations, risk tolerance, time horizon, income tax issues, and asset allocation. It also identifies the criteria we will use to select and evaluate managers.
The IPS is the "business plan" for the portfolio, providing the framework for all future investment decisions. After reviewing it with the client and getting agreement for the policy and any future changes, we ask the client to sign the IPS to ensure that we are all clear on the intended path.