Critical Element of Investment Policy Statement for a Retiree

Hard Private Wealth Management Investment Policy Statement

Michael is a 55-year-old high-net-worth individual who recently transitioned into retirement. He has a current portfolio valued at $3 million, primarily allocated to equities and real estate. Following his retirement, Michael is determined to maintain his lifestyle while also ensuring adequate funds to support healthcare costs and potentially assist his grandchildren with their education. He approaches a financial advisor to draft a comprehensive Investment Policy Statement (IPS). In developing the IPS, the advisor needs to prioritize Michael's goals, risk tolerance, and investment horizon.

Which of the following elements is MOST critical to include in the IPS to best reflect Michael's situation and provide a solid foundation for his investment strategy?

A detailed set of investment restrictions that prohibits equity investments due to market volatility.

An allocation strategy that outlines a balanced approach, prioritizing capital preservation while allowing for growth.

A specific target return that aims to exceed the historical performance of the S&P 500.

Hint

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