Using your client's information, submit the first draft of an Investment Policy Statement (IPS) Preamble. Please define
Question:
Using your client's information, submit the first draft of an Investment Policy Statement (IPS) Preamble. Please define the context of the IPS Preamble, including identification of the client, other actors, and key responsibilities.
Additional information to address in the paper includes:
- An overview of the client;
- A detailed explanation of the investment policy statement based on the unique needs and preferences of the client, including an explanation of the investment and objectives for the portfolio; and
- A description of any investment constraints, liquidity needs, and the client's time horizon (be sure to incorporate knowledge from the course that may include the discussion of: expected standard deviation, risk/reward, downside deviation, present/future value of investment, etc.).
Sam Smith is a 70-year-old entrepreneur who sold his business 5 years ago after 35 years. He would like to utilize his expertise to start another business in his former industry.
Liza Smith is 62 and a passionate equestrian.
Both are U.S. citizens and Montana residents.
The Smiths have no children.
They own homes in both Montana and California and have no plans to sell.
Sam and Liza's legacy plan is to create an equestrian rescue ranch on their current Montana ranch.
They have assets of $110 million.
$47 million is held in their living trust investment account, the majority of which is invested in a portfolio of municipal and corporate bond funds with a high-yield exposure to each of 11%.
$1.1 million is in Sam's IRA invested in a taxable bond fund.
Homes and personal property they plan on keeping throughout their lives are valued at $38 million (not including the Montana ranch)
Other properties and land that could be divested are valued at $12 million.
The Smith’s Montana ranch is valued at $5 million.
Total liabilities are $6 milion. A fixed-rate securities-based loan on their investments is scheduled to adjust to a floating rate in 9 months.
The Smiths current budgetary needs are approximately $175,000 per month.
