Client name: Aaron McDavid, Age: 25, Time Horizon: 40 years, primary objective: growth, need for liquidity: high, risk tolerance: high, investment knowledge: high, gross annual income: $50,000 net worth: $550,000 anticipated annual contributions over next 5 years: $7,000 anticipated annual contributions thereafter until retirement:$9,500 portfolio: $140,000 O’Leary canadian bond yield(series A) fund. $15,000 RBC global energy fund. $12,500 CL money market fund. $20,000 Mawer canadian equity fund. $100,000 Mawer U.S. equity fund. $85,000 AGF canadian bond fund.
PART 1. Investment Policy Statement should contain:
Client Profile/Scenario
Investment Objectives (Safety, Income, Growth, Liquidity, Tax)
Be specific on targets for income and/or growth
Specify liquidity needs
Constraints (Time Horizon, Liquidity, Tax, Legal/Regulatory, Unique)
List of acceptable/prohibited investments
Role of Investment Advisor
Initial (Strategic) Asset Allocation Recommendation
Portfolio Monitoring
Be specific on re-investment/re-balancing process
Performance Appraisal Methodology
PART 2. Investment Recommendation
Should contain:
Summary of importance of Asset Allocation
Current Asset Allocation
Recommended Asset Allocation
Specific changes /trades required
Specific mutual fund recommendations and rationale
Calculation of expected portfolio return
PART 3. Investment Projection
should contain:
Accurate projection of portfolio value at retirement (using expected portfolio return from Part 2)
Statement indicating that performance is not guaranteed and that past performance does not necessarily predict future performance.
Calculation of the potential pre-tax retirement income (hint: use more conservative return for this calculation)
PART 4. Appendix
should contain:
List of assumptions
Documentation of recommended mutual funds (ie. Fund QuickTake Reports, Snapshots from Morningstar, Globefund.com etc.)
Your original client scenario
Basic:
https://www.ci.com/orderform/pdf/portfolio_select_series/PSS_SampleIPS_e.pdf
More detailed:
https://institutional.vanguard.com/iam/pdf/IAMIPS.pdf
https://www.canadiancapitalist.com/sample-investment-policy-statement/