Individual Investment Policy Statement Template

Private-client IPS: goals, required return (KaTeX), risk limits, constraints, asset allocation ranges, glide path, rebalancing, fees, review triggers

财务、投资与会计完整MiFID II Art. 25; Delegated Reg (EU) 2017/565 Art. 54; SEC Reg BI; SEC IA-5248investment policy statement individual math更新于 2026年10月24日

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使用方法: Use it when agreeing the standing investment policy with a private client or family after the risk profile is confirmed. Fill the goals and required return first, then the allocation and ranges. The main pitfall is raising risk to close a funding gap instead of changing savings, dates or targets.

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Investment Policy Statement: [Client or household name]

Investment policy statement (IPS) for a private client, a couple or a family: the written agreement between the client and the adviser or portfolio manager on goals, return requirement, risk, constraints, strategic asset allocation, implementation, rebalancing, monitoring, fees and responsibilities. An individual IPS is a professional practice document rather than a legal requirement in most jurisdictions; it supports the suitability record under MiFID II Article 25(2) and Commission Delegated Regulation (EU) 2017/565 Article 54, the care obligation of SEC Regulation Best Interest (17 CFR 240.15l-1) and the investment adviser duty of care described in SEC Release IA-5248. Replace every [bracketed] value and every row marked Example. Projections are illustrative and not guaranteed. This is a document format, not financial, investment, tax or legal advice. Obtain the regulation or rule for the normative text.

Document control

Field	Value
Document ID	[IPS-YYYY-NNN]
Version	[1.0]
Status	[Draft / Signed / Superseded]
Owner	[@adviser]
Approvers/reviewers	[@investment-committee], [@compliance-reviewer]
Last updated	YYYY-MM-DD
Classification	Confidential: client personal data
Client(s)	[Names]
Accounts covered	[Account numbers and custodians]
Service type	[Discretionary management / Advisory / Self-directed with adviser review]
Base currency	[EUR / USD / other]
Client risk profile reference	[CRP-YYYY-NNN, version]
Governing agreement	[Agreement ID and date]
Next scheduled review	YYYY-MM-DD

Approvals

Role	Name	Decision	Date
Adviser or portfolio manager	[Name]	[Proposed]	YYYY-MM-DD
Investment committee or supervisor	[Name]	[Approved]	YYYY-MM-DD
Client (each account holder)	[Name]	[Agreed and signed]	YYYY-MM-DD

Revision history

Version	Date	Author	Change
0.1	YYYY-MM-DD	[@adviser]	Draft for discussion
1.0	YYYY-MM-DD	[@adviser]	Signed by the clients
[1.1]	YYYY-MM-DD	[@adviser]	[Annual review: describe changes]

Purpose and scope
Client profile summary
Goals and return requirement
Risk objectives
Constraints
Strategic asset allocation and ranges
Implementation
Rebalancing and cash management
Monitoring, reporting and review
Roles, fees and conflicts
Acknowledgement and signatures
Glossary and references
Standard and licence note

1. Purpose and scope

This statement sets out how the assets listed below will be invested and supervised. It records the client's goals, the return needed to reach them, the risk the client is willing and able to take, the constraints that apply, the long-term asset allocation and the rules for implementation, rebalancing, monitoring and review. It is a standing policy: individual transactions follow it, and any departure needs a documented exception or a new version.

Item	In scope	Outside scope but considered
Managed or advised accounts	[Account list]
Pension and retirement accounts	[In scope / Outside]	[Detail]
Concentrated or restricted holdings	[In scope / Outside]	[Detail]
Property and business interests		[Detail]
Emergency reserve		[Amount and where held]

Example: the IPS covers the joint discretionary account of Mara and Theo Lind at Kestrel Bay Capital Europe (fictional), EUR 200,000 at inception, split into a retirement sleeve (EUR 160,000) and an education sleeve (EUR 40,000), with monthly contributions of EUR 1,500. Outside scope but considered: employer pension plans (EUR 185,000), employer shares held by Theo (EUR 40,000), emergency reserve (EUR 38,000) and the family home.

2. Client profile summary

Item	Summary	Source
Household	[Ages, dependants, employment]	[CRP section 1]
Net worth and liquidity	[Amounts]	[CRP section 2]
Risk tolerance (willingness)	[Band]	[CRP section 5.1]
Capacity for loss (ability)	[Amount or band]	[CRP section 5.2]
Resulting profile	[Band per sleeve]	[CRP section 9]
Knowledge and experience outcome	[Eligible product families]	[CRP section 4]
Sustainability preferences	[Choices]	[CRP section 6]

Example: two working adults aged 46 and 44 with two children; net worth EUR 673,000; tolerance bands Growth and Balanced, with the lower band applied; capacity for loss EUR 50,000; profile Balanced for the retirement sleeve and Cautious for the education sleeve; eligible products are funds, ETFs and listed shares; at least 20% sustainable investments and consideration of greenhouse gas emissions and controversial weapons.

Copy the outcomes, not the questions. If the profile changes after the IPS is signed, for example because a holder changes job or the household receives an inheritance, the IPS must be checked against the new profile before the next portfolio decision, and a new version is signed if any band, goal or constraint changes. Where the two holders of a joint account have different tolerance bands, say which band applies and why, so that both understand the trade-off they accepted.

3. Goals and return requirement

3.1 Goals

ID	Goal	Target (nominal)	Year needed	Priority	Sleeve
OBJ-001 (Example)	Retirement capital to supplement pensions	590,000	2042 (16 years)	Essential	Retirement
OBJ-002 (Example)	University costs for two children	66,000	2032 (6 years)	Important	Education
OBJ-003 (Example)	Help with children's first home	Not fixed	After 2040	Aspirational	Surplus of retirement sleeve

3.2 Required return

The required return is the annual rate, after all costs, at which the current value plus planned contributions reaches the target by the target date. With contributions made at the end of each year:

FV = PV\,(1+r)^{n} + C\,\frac{(1+r)^{n}-1}{r}

where $PV$ is the value today, $C$ the annual contribution, $n$ the number of years and $FV$ the target. Solve for $r$ numerically (a spreadsheet goal-seek or rate function). The real required return removes expected inflation $\pi$ :

r_{\text{real}} = \frac{1+r}{1+\pi} - 1

Sleeve	PV	Annual contribution	Years	Target	Required return (nominal, after costs)
Retirement (Example)	160,000	14,400	16	590,000	3.66%
Education (Example)	40,000	3,600	6	66,000	1.45%

Example: with inflation assumed at 2.0%, the real required return of the retirement sleeve is (1.0366 / 1.020) minus 1, or about 1.63% a year.

3.3 Expected return of the proposed allocation

Use the firm's capital market assumptions (CMA), stated with their date and source. The expected return of a sleeve is the weighted average of the asset class assumptions; subtract the total cost estimate to get the expected return after costs.

E[R_p] = \sum_{i} w_i\,E[R_i] \qquad E[R_p]_{\text{net}} = E[R_p] - c

Asset class	CMA return (Example)	Retirement weight	Education weight
Global equity	6.5%	50%	25%
Global investment-grade bonds	3.5%	35%	0%
Short-duration bonds	3.0%	0%	60%
Inflation-linked bonds	3.2%	5%	0%
Listed real estate	5.5%	5%	0%
Cash	2.5%	5%	15%
Expected return before costs		5.04%	3.80%
Total cost estimate (section 10)		1.10%	1.10%
Expected return after costs		3.94%	2.70%
Required return (section 3.2)		3.66%	1.45%
Margin		0.28 pp	1.25 pp

Example check: retirement sleeve 0.50 x 6.5 + 0.35 x 3.5 + 0.05 x 3.2

0.05 x 5.5 + 0.05 x 2.5 = 5.035%, shown as 5.04%; education sleeve 0.25 x 6.5 + 0.60 x 3.0 + 0.15 x 2.5 = 3.80%. At 3.94% after costs the retirement sleeve projects to about EUR 609,700 in 16 years; at 2.70% the education sleeve projects to about EUR 70,000 in 6 years. The retirement margin is small, so the IPS records the agreed response in section 9: if the projected value falls below the target at a review, the clients will first raise contributions, then move the target date, before any change of risk band is considered.

4. Risk objectives

Measure	Retirement sleeve	Education sleeve	Basis
Risk profile band	Example: 3 Balanced	Example: 2 Cautious	Client risk profile
Illustrative stress loss of the model	Example: 20% (EUR 32,000)	Example: 12% (EUR 4,800)	Firm stress scenarios
Combined stress loss	Example: EUR 36,800		Sum of the two sleeves
Capacity for loss of the mandate	Example: EUR 50,000		Client risk profile section 5.2
Expected annual volatility range	[Range from CMA]	[Range]	Firm models
Loss alert to client	Fall of 10% from the start of a reporting period, then each further 10%	Same	Delegated Regulation 2017/565 Article 62(1) for portfolio management

Explain in writing that markets can fall further than any stress scenario and that a balanced portfolio can take several years to recover after a large fall. The client should not expect the IPS limits to cap losses; they are design and monitoring limits.

Present each risk measure as an amount of money on the actual portfolio as well as a percentage. Most clients relate better to "in a scenario like a severe market fall, the retirement sleeve could lose about EUR 32,000" than to a volatility figure. Show also a range of outcomes over the goal horizon, for example a weak, a central and a strong path from the firm's projection tool, and say how long a recovery has taken in past falls of a similar size. Check that the combined stress loss of all sleeves stays inside the capacity for loss in the risk profile; if it does not, the allocation is wrong, not the capacity.

5. Constraints

ID	Type	Constraint	Effect on the portfolio
CON-001 (Example)	Time horizon	Retirement sleeve 16 years to first withdrawal, then 25 or more years of drawdown	Long horizon supports growth assets within the Balanced band
CON-002 (Example)	Liquidity	Education withdrawals of about EUR 11,000 a year from 2032	Education sleeve in short-duration bonds and cash; glide path in section 6.3
CON-003 (Example)	Taxes	Gains taxed on realisation; contributions to [tax-advantaged account] allowed up to [limit]	Use tax-advantaged accounts first; realise gains within annual allowances; [tax adviser] confirms
CON-004 (Example)	Legal and regulatory	Theo is an insider for employer shares	No trading in employer shares inside the mandate; outside holdings sold only in open windows
CON-005 (Example)	Unique: concentration	EUR 40,000 employer shares outside the mandate	Mandate excludes that issuer and underweights its sector
CON-006 (Example)	Unique: sustainability	At least 20% sustainable investments; PAI on emissions and controversial weapons	Use qualifying fund variants; report the share each year
[CON-NNN]	[Type]	[Detail]	[Effect]

Write each constraint so that a reviewer can test whether the portfolio respects it. "The client is cautious about the employer's shares" cannot be tested; "the mandate holds no shares of the employer and its sector weight is at most the benchmark weight" can. Review the tax constraints with the client's tax adviser at least once a year, because allowances and account limits change, and record who confirmed them.

5.1 Local equivalents of tax-advantaged accounts

Names only, as of 2026-10, examples not exhaustive. Contribution limits, tax treatment and eligibility change often; check local rules.

Country	Retirement accounts	Other tax-advantaged savings	Education savings
United States	401(k), IRA, Roth IRA	Health savings account (HSA)	529 plan
United Kingdom	Workplace pension, SIPP	ISA, Lifetime ISA	Junior ISA
Canada	RRSP	TFSA	RESP
Australia	Superannuation
Germany	Betriebliche Altersversorgung, Riester, Rürup
France	PER	Assurance-vie, PEA
Japan	iDeCo	NISA
[Country]	[Name]	[Name]	[Name]

6. Strategic asset allocation and ranges

6.1 Targets and ranges

Asset class	Retirement target	Range	Education target	Range	Combined target	Benchmark component
Global equity	50%	45 to 55%	25%	20 to 30%	45%	[Global equity index, net return]
Global investment-grade bonds	35%	30 to 40%	0%	0 to 5%	28%	[Global aggregate bond index, hedged to base currency]
Short-duration bonds	0%	0 to 5%	60%	55 to 65%	12%	[1 to 3 year government and corporate index]
Inflation-linked bonds	5%	0 to 10%	0%	0 to 5%	4%	[Inflation-linked bond index]
Listed real estate	5%	0 to 8%	0%	0%	4%	[Global listed real estate index]
Cash	5%	2 to 10%	15%	10 to 20%	7%	[Overnight rate in base currency]
Total	100%		100%		100%

Example check of the combined column: the retirement sleeve is 80% of the mandate and the education sleeve 20%, so global equity is 0.8 x 50% + 0.2 x 25% = 45%; investment-grade bonds 0.8 x 35% = 28%; short-duration bonds 0.2 x 60% = 12%; inflation-linked 4%; real estate 4%; cash 0.8 x 5% + 0.2 x 15% = 7%; total 100%.

Set ranges wide enough that normal market moves do not force frequent trading, and narrow enough that the sleeve cannot drift into a different risk band. A practical test is that a sleeve at the edge of every range at once should still sit inside the growth-asset range of its model in the risk profile. In the example the retirement sleeve holds 55% growth assets (equity and listed real estate) at target, inside the 40% to 60% range of the Balanced model, and the education sleeve holds 25%, inside the 20% to 40% range of the Cautious model.

6.2 Currency, concentration and other limits

Limit	Value
Unhedged foreign currency exposure	[Maximum % of sleeve]
Single issuer (excluding government bonds and diversified funds)	[Maximum %]
Single fund	[Maximum %]
Excluded issuers and sectors	[List, including employer per CON-004]
Leverage and derivatives	None, except currency hedging inside funds
Illiquid or private assets	None (not eligible per knowledge assessment)

6.3 Glide path

Reduce risk in a sleeve as its goal date approaches. Record the steps in advance so that changes are rules, not reactions.

Sleeve	Date	Equity target	Defensive target
Education (Example)	Inception to 2029	25%	75%
Education (Example)	2030 to 2031	15%	85%
Education (Example)	From 2032 (withdrawals)	0 to 10%	90 to 100%
Retirement	[Date]	[%]	[%]

7. Implementation

Topic	Policy
Vehicles	[Index funds and ETFs as core; active funds where the selection criteria are met; individual shares within limits]
Selection criteria	Total cost, tracking difference or after-cost performance over [period], size and liquidity, domicile and tax efficiency, sustainability classification, operational quality of the manager
Account location	[Hold the least tax-efficient assets in tax-advantaged accounts first]
Sustainability	Product sustainability data checked at selection and annually; share of sustainable investments reported
Trading	Best execution under the firm policy; no market timing outside the rebalancing rules
Conflicts	In-house products only where they meet the same criteria as external ones (section 10)
Transfers in	[In kind where possible to avoid realising gains]

7.1 Initial portfolio and transition

Step	Action	Date	Notes
T-001 (Example)	Transfer four ETFs already in the model universe in kind (EUR 92,000)	YYYY-MM-DD	Avoids realising gains on those holdings
T-002 (Example)	Sell three active funds that cannot be transferred or do not fit the IPS (EUR 108,000) and reinvest	YYYY-MM-DD	After the transfer completes; within the annual gain allowance where possible
T-003 (Example)	Invest to targets (EUR 160,000 retirement, EUR 40,000 education); start monthly contributions	YYYY-MM-DD	EUR 1,200 retirement, EUR 300 education

8. Rebalancing and cash management

Rule	Value
Calendar check	Quarterly, and at each annual review
Threshold trigger	Any asset class outside its range in section 6.1
Rebalance to	[Target / Edge of range]
Use of cash flows	Contributions buy underweights; withdrawals sell overweights
Minimum trade size	[Amount] to avoid uneconomic trades
Tax awareness	Prefer rebalancing with cash flows or in tax-advantaged accounts
Cash buffer in the mandate	[Target cash per section 6.1]

9. Monitoring, reporting and review

Item	Frequency	Content
Periodic statement	Quarterly (portfolio management)	Holdings and values, transactions, performance versus benchmark, fees; see the Client Portfolio Review
Ex-post costs and charges	Annual	Total costs in amount and percentage, cumulative effect on return
Goal progress	Annual	Projected value per goal versus target
Suitability review	At least annual	Profile refresh, IPS confirmation or update
Loss alert	When triggered	10% fall from the value at the start of the reporting period, and each further 10%

9.1 Review triggers

Change in the client's circumstances recorded in the risk profile (income, family, health, inheritance, residence).
A goal moves, is achieved or is added.
Projected value of an essential goal below target at a review.
Asset class outside its range for more than one quarter.
Change in capital market assumptions large enough to change the expected return by [threshold].
Change of law or tax rules affecting the accounts.

9.2 Agreed responses

Agree the responses before they are needed. When a market fall or a missed contribution puts a goal behind schedule, an agreed sequence of actions protects the client from changing the risk band at the worst moment, and protects the adviser from pressure to recommend more risk to close a gap the client cannot afford to lose.

Situation	Agreed response
Projection below target for an essential goal (Example)	First raise contributions, then move the target date, then reduce the target; change the risk band only after a new risk profile
Projection well above target (Example)	Consider reducing risk to lock in the goal
Large market fall (Example)	Follow the rebalancing rules; do not change the allocation without a review meeting

9.3 Completing and reviewing this IPS

Complete the sections in order and do not start section 6 until the required return in section 3 has been compared with the expected return of the proposed allocation. A supervisor reviewing the draft should recompute at least the required return, the expected return after costs, the combined weights and the combined stress loss, and should confirm that every constraint has a stated effect on the portfolio.

Common errors are: a risk band in the IPS that differs from the confirmed profile; goals without a date or an amount; capital market assumptions without a source or date; ranges that overlap a different risk band; costs shown as an adviser fee only; assets outside the mandate ignored, so a concentration is missed; and an IPS that is signed once and never reviewed. Each of these weakens the suitability record that the IPS is meant to support.

10. Roles, fees and conflicts

Party	Responsibilities
Client	Provide accurate information; tell the adviser about changes; approve this IPS and its updates
Adviser or portfolio manager	Implement and monitor the IPS; report; recommend changes; keep records
Custodian	Hold assets; send account statements
Tax adviser	Advise on tax constraints and account use
Compliance function	Review the IPS and suitability records

Cost item	Rate (Example)	Annual amount on EUR 200,000 (Example)
Management or advisory fee	0.80%	1,600
Custody and platform	0.05%	100
Transaction costs (service)	0.04%	80
Fund ongoing charges	0.16%	320
Fund transaction costs	0.05%	100
Total estimate	1.10%	2,200

Give the client the total cost in money as well as in percent, and show the effect of costs over the goal horizon. In the example, costs of 1.10% a year reduce the expected return of the retirement sleeve from 5.04% to 3.94%; over 16 years that difference is larger than the whole margin between the expected and the required return, so cost control is part of meeting the goal, not an afterthought. Compare the ex-ante estimate here with the annual ex-post statement in the Client Portfolio Review and explain any difference to the client.

Third-party payments: [None / describe and quantify]. Conflicts of interest: [In-house funds, remuneration linked to products, describe how they are managed], with reference to the firm's Conflicts of Interest Register (compliance/conflicts-of-interest-register).

11. Acknowledgement and signatures

The client(s) and the adviser agree that this statement reflects the client's goals, risk profile and constraints as understood on the date below. The client(s) understand that investment values can fall as well as rise, that projections are illustrative and based on stated assumptions, and that past performance does not predict future results. The adviser will manage or advise on the accounts in line with this statement and will propose an update when a review trigger occurs.

Party	Name	Signature	Date
Client	[Name]	[Signature]	YYYY-MM-DD
Client	[Name]	[Signature]	YYYY-MM-DD
Adviser or portfolio manager	[Name]	[Signature]	YYYY-MM-DD

12. Glossary and references

Glossary

Term	Meaning
Strategic asset allocation	Long-term target weights for each asset class
Range	The band within which an asset class may move before rebalancing
Required return	The annual return after costs needed to reach a goal
Capital market assumptions	Expected returns and risks for asset classes, set by the firm at a date
Glide path	A planned reduction of risk as a goal date approaches
Benchmark	A reference index mix used to judge performance
Rebalancing	Trading back towards target weights

References

Source	Version or date	Use
Directive 2014/65/EU (MiFID II) Articles 24 and 25	Consolidated text on EUR-Lex	Best interest, suitability, reporting
Commission Delegated Regulation (EU) 2017/565 Articles 50, 54, 60, 62	As amended, including Delegated Regulation (EU) 2021/1253	Costs, suitability, periodic statements, loss alerts
SEC Regulation Best Interest	17 CFR 240.15l-1	US broker-dealer care obligation
SEC Release IA-5248	2019-06-05	US investment adviser fiduciary duty
Uniform Prudent Investor Act	1994 (Uniform Law Commission), as enacted by each US state	Prudence standard for trustees of private trusts
CFA Institute position paper on IPS elements for individual investors	2010, cited by name only	Background reading
Firm capital market assumptions	[Version and date]	Expected returns in section 3.3

Related templates: Client Risk Profile (finance/client-risk-profile), MiFID Suitability Report (compliance/mifid-suitability-report), Client Portfolio Review (finance/client-portfolio-review), Strategic Asset Allocation Study (finance/strategic-asset-allocation-study), Responsible Investment Policy (finance/responsible-investment-policy), Financial Plan (personal/financial-plan), Retirement Plan (personal/retirement-plan).

Standard and licence note

Based on Directive 2014/65/EU (MiFID II), Commission Delegated Regulation (EU) 2017/565 as amended, SEC Regulation Best Interest (17 CFR 240.15l-1) and SEC Release IA-5248, cited by article, section and release number with requirements described in original wording. EU legislation is reused with acknowledgement of EUR-Lex; US federal material is public domain. The CFA Institute position paper on IPS elements for individual investors is cited by name only; no text from it is used, and this template is not affiliated with or endorsed by CFA Institute. The structure, wording, formulas as applied and the fictional examples are original. Check the current consolidated texts and local rules, including pending EU Retail Investment Strategy changes, before use. This is a document format, not financial, investment, tax or legal advice. Template licence: MIT.