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Software for Creating an Investment Policy Statement for Individual Investment Management Clients

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, etc.)

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

Now you can forget about buying expensive IPS software, and going through all of that input rigmarole, 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.

Here’s Your Options for Creating Investment Policy Statements:

• Spend at least fifty hours researching and making one yourself. Then you’ll be tinkering with typos and grammar for another twenty hours. This isn’t a big mystery, and can be easily done if you know how, but how valuable is your time? If you value your time at $100 per hour, then you’re going to spend over $5,000 reinventing the IPS wheel. Reading this and then buying our IPS tool takes around ten minutes, then half an hour to understand the directions.

• You used to be able to buy expensive Investment Policy Statement software from Ibbotson for

$300. Morningstar bought this industry icon in 2006, so now you’ll need to buy their whole package for well over $1,000 per year just for that.

• Spend

$300 PER YEAR for IPSAdvisorPro. Sure they spent big money making their fancy website to make everything look super-professional, and have done tons of personal schmoozing to get high-AUM advisors to use it, but over $300 every year just to make an IPS.

The one and only advantage is that it makes Investment Policy Statements for institutions (ours is only for individual clients). How many billion dollar endowments are you going to manage money for?

Then they say that editing a Word document won’t let you reflect how you manage money. You must be kidding! That’s the whole point of ours — you can type in exactly what you want to say about how you manage money. You have total 100% control over everything, including what’s printed out, that’s the point.

The bottom-line (what you give individual clients), is about the same as ours, and if it’s not then you can easily make it the same — by just typing the text in (or inserting images or number graphs made in Excel).

• Spend more time searching for something similar from a firm that just copied our IPS tools, for about the same price. It’s just going to have the same end results. Then because it’s probably an actual input-driven software program, it’s going to cause problems, expire, not print what you want, and cost you more money both initially and in annual update fees.

Good Investment Policy Statements will all end up looking about the same. Even though you may be able to find something similar, we think ours is best because it’s been tried and tested in the Real World via thousands of clients since the 90’s.

• Buy this simple unprotected Word document, so you can make any changes you want to fit your practice, make it print exactly the way you want it to, and then make as many as you want, for no additional charges.

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, save it using a different file name, change it back to black font, print two copies, put the original in the investment reports, put a copy in their file, and you’re done. On average, it takes around half an hour of work (once you’ve initially set it up to make it yours, which will take over an hour).

There are little-to-no original ideas here. Most all Investment Policy Statements are essentially the same. It’s just another financial job that needs to be done when the need arises, and this is the best tool to do it.

The point is not to dazzle clients with fancy new bells and whistles. It’s just about doing a good job covering all of the bases, saving money, not spending a lot of time doing the work, saving you from having to reinvent the wheel, keeping you out of compliance trouble, and having a backup of what clients 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 much less work and time than code-driven IPS software.

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

Answers to Investment Policy Statement Software FAQs

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

• It’s just a small-unprotected MS Word document, without macros. Actually, there’s three Word docxs, the second and third are just more useful template text you can add.

• What it looks like, is irrelevant, because it’s a Word docx that you’d format to make it look the way you want. So assume you won’t like how it looks when you get it, so then you’ll format it to make it look right before you save it as a template.

•It’s not a software program with input fields, categories that bring up different text, menus, nor a database full of topics or text to choose from. So it’s not interactive in any way. You’ll 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 canned topic lists.

Software programs will not know all of the details of the client’s life, and menu driven programs are never detailed nor specific enough. So just typing this data is the most efficient way to go. Then other IPS software just spits out what it spits out, so you’ll be wishing you could edit the final text before printing, but can’t.

• There are no installation procedures, nothing to break or confuse you, it’s impossible for it to alter other programs or crash your computer, and it doesn’t go online to do anything (so there’s no chance of a practice-ruining privacy breach that’s bound to happen).

• You’ll only pay once, it never expires, there are no updates, and you can use it as many times as you want for no additional costs.

• It’s easily delivered as e-mail attachments and you’ll probably be able to get it within a few minutes if you call and order by phone.

• It can be easily sent from you to the client as an e-mail attachment.

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

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

This is because there are way too many unique factors to consider in each document, so a template can’t be created. So you usually have to construct an institutional IPS from scratch. How many times has the need for this came up in your practice? Maybe once in a lifetime if you’re lucky. So there’s little-to-no to need to buy IPS software for institutions. So don’t buy IPS creating software just because you can make institutional IPSs, because 99.9% of your work will be for individual clients.

• 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 the usual troubles.

It’s common for investors to want to complain after realizing their investment performance isn’t what they wanted. With this IPS software program, you can show them you achieved the type of results they initially agreed upon.

Then 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, the client passed away and now you’re dealing with an heir, etc.

• The investor policy statement was initially developed in 1992, 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 IPS software suites further refined it. It was perfected around 2005, after using it for hundreds of clients in the Real World. It hasn’t been updated since 2009 because nobody has suggested any improvements. Another file with more template text was added in 2009 for extra value, but the price stayed the same.

• You can still get the discount on the companion piece — the Investment Fact Finder later if you don’t want it now.

• The learning curve is about an hour of reading the directions and tinkering with your first case. After you get the hang of it, and make the template your own, you can make a professional IPS for clients in less than half an hour.

Contents of the Seven Main IPS Software Pages

There are a total of 23 pages of text

Page One: A generic IPS overview page. This is the only thing you can look at before buying it, because there is no demo .

Page Two: Account basics and client profiles: Discuss the overall purpose(s) of the investment account(s), and relevant personal particulars.

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

You reiterate what they want their investment portfolio(s) to do for them (e.g. provide after-tax inflation-adjusted retirement income). Then you’d write about investment strategies like total-return vs. capital preservation, and if you’re focusing more on risk reduction than growth, etc.

You’d edit and/or add more text about how much involvement they want to have in the portfolio management process; tax brackets, liquidity needs, preferences, and constraints (e.g. security holdings, legal, regulatory); who the authorized investment decision makers are, both your and the investors’ future economic assumptions, etc.

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 easily edit this IPS software program to conform to your own risk profile calculator and/or investment fact finder.

You’d edit text about who manages which accounts, how much they’re worth, if they’re tax-qualified or not, and what investment strategies will be utilized (the combination of market timing, security selection, and asset allocation).

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

Page Four: You’d just edit text about estimated range of rate of return goals that they chose, and how they see investment risk, both objectively and subjectively.

You’ll also edit text about your fees, commissions, trading ticket charges, expenses, other charges, and how everyone is paid; with account info, if the account if discretionary or not, basic investment diversification text, etc.

Page Five: Write about fixed income and equity understandings, non-permissible securities / transactions / activities, and about other advisors.

Pages Six & Seven: You’d then edit text about monitoring, reviews, rebalancing, and comparing portfolios to benchmarks. and how often it’s done.

Then there’s a long disclaimer you can use for other things to help stay out of trouble.

Then there’s a place for them to concur and everyone to sign off if they want to.

Pages Eight to Twelve: This has more generic sample text you may want to use. There are long explanations describing what investment risk tolerance is, and the differences between the five categories, and much more.

Then the other Word docxs have 11 pages of generic text on the same subjects that you may want to use.

When you buy this IPS tool, there’s plenty of red meat to pick from to get what you want without having to reinvent the wheel. The whole point is to just cut, paste, and edit this template to make your own custom IPS. Then it only takes several minutes to make it specific to a client.

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