Investment Strategy Based on Ability to Implement or Monitor Investment Portfolio
The development of the investment strategy through the investment policy statement requires a thoughtful process that includes client input and understanding. A significant risk in developing an investment policy statement is the omission of an important fact by the client. The recommended investment strategy must be made in light of any constraints which might impede the ability to implement or monitor the investment portfolio during the period of the advisory engagement. The following constraints might limit the ability to implement and monitor the investment recommendations:
- timeliness of information received;
- electronic access to account information;
- ability to execute transactions;
- number of investment accounts;
- number of investment account custodians.
The investment policy statement would address any constraints with the agreed upon delegation of duties and responsibilities to the client and their agents (i.e. account custodian, brokers, insurance agents, trustees) to facilitate the investment strategy. The recommended client investment policy statement is based upon the mutually-defined:
- Scope of engagement;
- Client goals, needs and priorities;
- Quantitative data to be provided;
- Personal and economic assumptions;
- Delegation of duties and responsibilities.
An investment policy statement is the primary document that governs the investment decision-making process throughout all market conditions so you can remain focused on your True North. The investment policy statement is the map you follow. The continuous ongoing process of the assessment of your current asset allocation model and reallocation of your portfolio assets allows you to make the required decisions to stay on course.
