Investment Policy Statement Essentials for High-Net-Worth Individual

Hard Private Wealth Management Investment Policy Statement

Sarah is a high-net-worth individual who has recently reached out to a financial advisor to develop a comprehensive Investment Policy Statement (IPS). In her discussions, Sarah emphasized her desire for capital preservation as she approaches retirement, but she also expressed interest in achieving a modest growth rate to fund her philanthropic passions in the future. The advisor is tasked with balancing Sarah's need for liquidity, her risk tolerance, and her investment horizon while ensuring alignment with her investment objectives and personal circumstances.

Considering the above context, which of the following statements best reflects an essential component of Sarah's Investment Policy Statement?

The IPS should prioritize aggressive growth strategies to maximize return, disregarding the potential for short-term losses.

The IPS should define specific asset allocation targets that reflect Sarah's risk tolerance and investment objectives.

The IPS should advocate for a fully liquid portfolio to ensure that Sarah can access her funds at any moment.

Hint

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