Creating an IPS for a Socially Responsible Investor

ABC Wealth Management has been working with a new client, Mr. John Smith, a 45-year-old professional with a stable income and plans to retire at 65. Mr. Smith has a current investment portfolio valued at $1.5 million and seeks guidance in developing an Investment Policy Statement (IPS) that aligns with his financial goals and risk tolerance.

In addition, Mr. Smith wants to ensure that his investment strategy supports his values, which include a commitment to socially responsible investing. He has expressed a willingness to increase his equity exposure in order to achieve a higher growth rate, but he also requires sufficient liquidity to cover his short-term expenses.

Write an essay that outlines the key components of an Investment Policy Statement tailored for Mr. Smith, including his investment objectives, risk tolerance, asset allocation, and any restrictions or preferences he wishes to implement. Discuss how the IPS will guide investment decisions and support Mr. Smith in achieving his financial goals.