Investment Policy Statement Prioritization for High-Net-Worth Client

Very Hard Private Wealth Management Investment Policy Statement

As a newly appointed wealth manager for a high-net-worth individual, you are tasked with creating a comprehensive Investment Policy Statement (IPS). Your client, Mrs. Alexandra Roberts, a 48-year-old entrepreneur with a net worth of $10 million, has expressed a wish to balance her philanthropic endeavors with her investment portfolio. She aims to allocate 40% of her investments toward socially responsible investments (SRI) while maintaining a reasonable return to fund her future lifestyle and charitable contributions.

During your discussions, Mrs. Roberts indicates a moderate risk tolerance, a preference for taxable investments due to her current income level, and a desire to have at least 60% of her portfolio in equities. Also, she has specified that the IPS should include clear guidelines on rebalancing and withdrawal strategies to facilitate her charitable giving.

When structuring the IPS, which of the following components should you prioritize to fulfill Mrs. Roberts' objectives effectively?

Outline specific target allocations for each asset class without addressing liquidity requirements.

Incorporate a dynamic withdrawal strategy that prioritizes growth while allowing for flexibility in charitable giving.

Focus solely on estimated long-term returns of asset classes, disregarding the client's tax situation.

Hint

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