Investment Policy Statement Software (IPS).

This is not for investors managing their own money. It's also not for making an IPS for Institutional Accounts (e.g., endowments, corporate pension funds, trusts with more than one person as beneficiary, etc.)

The main purpose of an IPS is to help define investment goals, and then to describe which strategies and investments will be used to meet them. It serves as a money management agreement to minimize conflicts

Forget buying expensive IPS software, and going through all of that input rigmarole and computer problems, just to make an Investment Policy Statement. This IPS template allows you to get the same results and benefits for a fraction of the cost, without paying again, and without the usual problems.

Your Options for Creating an Investment Policy Statement:

º Spend at least fifty hours researching and making one yourself. Then you'll be tinkering with typos and grammar for another ten hours. This isn't a big mystery, and can be easily done if you know how, but how valuable is your time? Reading and then buying our IPS costs around ten minutes.

º You used to be able to buy expensive, cumbersome, and full of bugs Investment Policy Statement software from Ibbotson for ~$300. Morningstar bought this industry icon in 2006. Now you need to buy their whole package for around $800 per year to use Ibbotson's old IPS software.

º Spend $495 or $395 PER YEAR for IPSAdvisorPro. The thing is that the bottom line (what you print, show, and give clients), is about the same as ours. And if it's not, then ours is just a template Word doc, so you can easily make it pretty much the same if it has something you like in it - by just typing the text in (and/or inserting graphs easily-made in Excel). There's nothing new nor different with IPSAdvisorPro, some guy just made an actual program, charges an arm and a leg for it, and then spends all of his time marketing it to Broker Dealers. C'mon ~$450 every year, for something you can get for just $29 once?! Why would anyone do that (let us know)?

º Spend more time searching for something similar from a firm that copied our IPS for about the same price. It's going to have the same end results. Then because it's an actual software program, it's going to cause problems, expire, and cost you more money both initially and in annual update fees.

Good Investment Policy Statements will all end up looking the about the same. Even though you may be able to find one cheaper, we think ours is best because it's been tried and tested in the Real World via thousands of clients.

º Buy this template Word document.

This is just a simple unprotected Word document, so you can make any changes you want to fit your business.

Most of the text you change to fit each clients' particular situation is in red font for quick and easy customization (you just edit the red text). Then you just change it back to black, save it using a different file name, print, put the original in the investment reports, put a copy in their file, and you're done. It takes less than half an hour of work for even the most complex client.

There are little-to-no original ideas here. Most all Investment Policy Statements are essentially the same. This one lets you say whatever you want, and is fast, easy, and inexpensive. There are no annual update charges - you just pay once and you'll have it forever.

The point is not to dazzle anyone with new fancy bells and whistles. It's to do a good job, not spend a lot of time doing the work, save you from having to "reinvent the wheel," keep you out of compliance trouble, and have a backup of what the client initially said they hired you for (so if they go crazy, you can just pull it out and prove you were just following their instructions). This does it all with less work than fancy software, but for a lot less time and money.

Reading the instructions will help determine what this is and how to use it. It also helps to look at the first page. It tells what an Investment Policy Statement is and what the benefits are. That clients are responsible for drafting the IPS, and then the advisor is responsible for adhering to it. It's not a contract; only a summary of agreed upon management techniques. Then it has a summary of the pages listed below.

Investment Policy Statement Software FAQs

º There is no demo, nor anything other than this to look at, because that would be giving away valuable content for free, sorry.

º It's just a small-unprotected MS Word document, without macros.

It's not a "software program" with input fields, categories that bring up different text, menus, or a database full of topics or text to choose from. You just have to do some editing work to get what you want. It takes less time to type these details in, than it would to hunt and peck from menus and topic lists.

Software programs will not know all of the details of the client's life, and menu driven programs are never detailed or specific enough. So just typing this data is the most efficient way to go. Other IPS software just spits out what it spits out, and so you'll be wishing you can edit the text, but you can't.

º You just open it with Word and edit to fit each client. There are no installation procedures, nothing to break or confuse you, and it's impossible for it to alter or crash your computer.

º You only pay once, it never expires, and you can use it as many times as you want for no additional costs.

º It's easily sent as an e-mail attachment. You can wait to get a CD in the postal mail for $9 more, but why? You'll probably be able to get it within a few minutes if you call and order by phone.

º Support does not apply to the IPS because there's nothing to support. If you're confused about something, you can ask and you'll get an answer.

º This Investment Policy Statement template is for individual financial planning and investment management clients. It's not for institutions, endowments, pension plans, corporations, trusts, etc.

This is because there are too many factors to consider, so you have to construct it from scratch. If you really want us to make one, you can collect all of the pertinent data, then hire us as a consultant.

º Investment Policy Statements are easy to get approved by your BD, because they love this stuff. They know this coupled with the Financial Planning Fact Finders are the best way to keep everyone out of trouble.

It's common for people to complain after their investment performance isn't what they wanted. With this, you can show them you achieved the type of results they initially agreed upon. The only way they can cause trouble, is if you didn't manage the account according to its guidelines. This shouldn't happen because you can refer to it if you forgot, replaced the investment manager, lost data, etc.

º It was developed in 1989, out of practical necessity, while working for several dozen financial planners and investment managers' in-person, as an employee. The early versions were straight out of the CFP, CFA, and CFP CE course materials.

Looking at the results from several expensive software suites further refined it. It was perfected around 2000, after using it for hundreds of clients. It hasn't been updated since 2007 because nobody has suggested any improvements (although another file with more template text was added in 2009 for extra value).

º You can still get the discount on the Investment Fact Finder later (it's $30 by itself and $18 with the IPS).

º After you get the hang of it, you can make an IPS for clients in ten minutes to half an hour.

Contents of the Main Six Pages
(There are a total of 23 pages of text)

Page One: An overview page. This is the only thing you can look at before buying it, because there is no demo (we put this in bold here because people still call wanting to see a demo).

Page Two: Account and client profiles: Overall purpose of the investment accounts.

This is where you summarize the clients' ages, health, goals, concerns, economic assumptions, and time frames (for portfolio construction, health, life expectancies, when they want to retire, etc.).

Reiterate what they want the investment portfolio to do for them (e.g., after-tax inflation-adjusted retirement income goals, total-return vs. growth, focus more on risk reduction than growth, etc.).

How much involvement they want to have in the portfolio management process. Tax brackets, investment liquidity needs, preferences, and constraints (e.g., security holdings, legal, regulatory). Who the authorized investment decision makers are. Investors' future economic assumptions.

Page Three: Tells which Investment Risk Tolerance Category they scored into. This is determined by weighting and scoring multiple-choice questions in the Investment Fact Finder. You can edit the IPS to conform to your own risk profile calculator (and you can also use/create both your own risk tolerance calculator and/or investment fact finder).

Who manages which accounts, how much they're worth, and if tax-qualified or not. What investment strategies will be utilized (market timing, security selection, and/or asset allocation).

There's an asset allocation table listing eight major asset classes (and over twenty sub-asset classes), targets, and ranges that may trigger rebalancing (you'll probably change all of this to fit the way you run your practice).

Page Four: Range of rate of return goals that they chose. How they see risk both objectively and subjectively.

Fees, commissions, trading ticket charges, expenses, other charges, and how they're paid. Account info; discretionary or not. Basic investment diversification.

Page Five: Fixed income and equity understandings. Non-permissible securities, transactions, and activities. Managers and advisors summary.

Page Six: Long disclaimer you can copy and use for other things to help stay out of trouble. Monitoring, review, comparing to benchmarks and how often it's done. A place for them to concur and sign if they want to.

Pages Seven and Eight: Some generic sample text you may want to use. Long explanations describing what investment risk tolerance is, and the differences between the five categories.

The point is to cut, paste, and edit this template to make your own custom IPS. Then it only takes a few minutes to make it specific to a client.

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