Purpose of an Investment Policy Statement

Very Easy Private Wealth Management Investment Policy Statement

Maria is a financial advisor working with a high-net-worth client who has just inherited a significant sum of money. To ensure that the client's investment goals align with their risk tolerance and time horizon, Maria decides to create an Investment Policy Statement (IPS).

Which of the following statements best describes the primary purpose of an Investment Policy Statement?

To outline specific investment strategies that the advisor will implement regardless of market conditions.

To provide a comprehensive framework for the client’s investment goals, risk tolerance, and constraints.

To serve as a legal document ensuring that the advisor acts in the best interest of the client.

Hint

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