Investment Policy Statement (IPS)

The written document that governs portfolio decisions for a client. A commitment device against in-the-moment behavioral mistakes during drawdowns or euphoric markets. Built on the CFA Institute objectives-and-constraints checklist "RRTTLLU": two objectives (Return, Risk) and five constraints (Time horizon, Taxes, Liquidity, Legal/regulatory, Unique circumstances). A complete IPS also includes an explicit rebalancing-policy clause (trigger + tolerance band + tax-awareness) and a "when to revise" section that separates life-event-driven revisions from market-driven (which should NOT trigger a revision). Good IPSs are 1-3 pages, re-read at every quarterly review, and survive a market crisis intact. Advisors should write IPSs for themselves before they write them for clients.

Lessons that use this term

• Investment Policy Statement (IPS): A Contract With Yourself
• Client Onboarding: From First Call to Funded Account
• Annual Reviews and Portfolio Drift Monitoring
• Difficult Client Conversations: Drawdowns, Risk, Lifecycle

Related terms

Anti-Money-Laundering (AML) · Currency Transaction Report (CTR) · Know Your Client (KYC) · Onboarding Workflow · Politically Exposed Person (PEP) · Rebalancing Policy

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