As a Registered Investment Advisor you have an investment philosophy. It may be “buy and hold,” quarterly asset reallocation, aggressive market timing, or other methodology. Your Form ADV provides the client with full disclosure about you, your services, and fees. Despite your best professional advice, you are still obligated to manage your clients portfolios based on their individual needs.

As a fiduciary, an advisor must invest in the best interest of its clients. Each client’s account must be managed on the basis of the client’s financial situation and investment objectives, and in accordance with any reasonable restrictions imposed by the client on the management of the account.

The purpose of an IPS is to allow your clients to state expectations and limitation on the management of their portfolio. An IPS specifies how the client’s investment portfolio will be funded.

  • The IPS is the result of the advisor and client working together to establish criteria for selecting investments and measuring performance.
  • It is the client’s way of documenting what has been communicated to the advisor.
  • It is a document the advisor should refer to whenever making changes in client portfolios. Even when the advisor uses model portfolios, investment trading may need to be tweaked to comply with the client’s IPS.
  • It serves as compliance documentation for the regulators to show that the advisor is managing the portfolio based on the individual needs of each client.
  • When each party understand and agree to the IPS, then the client(s) and the advisor will sign.

The sample IPS is delivered electronically in WORD for your easy customization. With just a few easy modifications you can craft your own customized template that fits your operations. You can then complete the data for each of your clients, creating their own individual IPS.

The IPS is available here as a stand-alone document or included in the RIA Forms and Research Library.

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