Importance of Investment Objectives in IPS

Medium Private Wealth Management Investment Policy Statement

Maria is a private wealth client who has just retired and is looking to invest her savings. She has a moderate risk tolerance, seeks steady income, and desires capital preservation. As part of her financial advisor's responsibility, they prepare an Investment Policy Statement (IPS) to align Maria's investment preferences with her goals and risk profile. In crafting the IPS, which of the following statements is most accurate regarding the importance of including specific investment objectives?

Including specific investment objectives in the IPS is unnecessary if the client already has a clear understanding of their risk tolerance.

Specific investment objectives in the IPS help to ensure that the investment strategy aligns with the client’s goals, providing a benchmark for performance evaluation.

The IPS should focus exclusively on asset allocation and ignore the client's specific investment objectives for simplicity.

Hint

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