Key Components of Investment Policy Statement

Very Hard Private Wealth Management Investment Policy Statement

John, a 55-year-old high-net-worth individual, is in the process of developing his Investment Policy Statement (IPS) with his financial advisor. John has a long-term goal of retiring comfortably at age 65, with an emphasis on preserving his capital while accommodating some growth. He has a moderate risk tolerance and currently holds a diversified portfolio primarily consisting of equities and fixed income instruments. His financial advisor is advising him on various components of the IPS, including asset allocation, investment objectives, and investment constraints.

Which of the following statements about the key components that should be included in John's IPS is MOST appropriate?

The IPS should prioritize aggressive growth strategies given John's moderate risk tolerance and short investment horizon.

The IPS must include liquidity needs, particularly as John's retirement date approaches and income generation becomes critical.

The IPS is not required to address tax considerations, as John's primary focus should be on capital preservation.

Hint

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