Pick which of the below statements are wrong … A. Acts as an operational guideline that represents the long-term, realistic interests of the investor B. The IPS allows continuity over time and portability for new managers C. An IPS can be changed when investors circumstances change. D. An IPS can be changed when capital market expectations change. E. An IPS can be changed when the Tax Law changes. F. IPS should act as the basis for dispute resolution , if there is a dispute between client and Portfolio Manager. G. IPS should have a section addressing dispute resolution. H. The Portfolio manager creating IPS has fiduciary responsibility towards the client and has to create an IPS in the best interest of the clients. Have fun 
The first statement has to start with IPS …
A- T B- T C- T D- T E- T F- Not sure on this one. G- Not sure on this one, is this language optional? H- T
d
I choose G
G seems unnecessary. I don’t think it’s a requirement
Is D right or wrong? Seems like if your cap mkt expectations change considerably you should change the IPS to reflect it. Isn’t the IPS where cap mkt expectations and investor objectives, etc. meet?
my view is that the IPS takes the investor’s specific personal situation into account. given the IPS (ie, specific situation), you mesh it with your CME to decide on the asset allocation. change in CME = change in asset allocation. if you had to change the IPS everytime CME changed, wouldn’t you be overhauling your entire client base’s IPS right around now? that would be a lot of paperwork. let me know if this doesnt sound right…
That makes sense. . . but still not 100%.
glad it helps. hopefully i’ve got the right idea.
answers?
> A. True > B. True > C. True > D. True > E. True > F. True > G. True > H. True
I’m changing my answer to A. I don’t think the wording on it is correct. A. “The IPS acts as an operational guideline that represents the long-term, realistic interests of the investor.” I think this is FALSE because the IPS is not an operational guideline. It is an outline of the risk/return profile of an investor combined with capital market expectations to form the optimal asset allocation. This description just does not seem particularly accurate. More detail on the other ones that seem a bit questionable: D. “An IPS can be changed when capital market expectations change.” Yes, this is true. The nature of the changes usually dictates whether the IPS needs to be modified. If it is a short-term change in capital markets expectations, then the change should be addressed by short term tactical allocations, which should be allowed by the IPS. If it is a long term change in capital market expectations, the entire IPS may need to be modified. G. “IPS should have a section addressing dispute resolution.” I think I remember reading that this is true. The IPS is the formal document setting expectations between the advisor and the investor and if disputes arise they should go back to the IPS. H. “The Portfolio manager creating IPS has fiduciary responsibility towards the client and has to create an IPS in the best interest of the clients.” I’m not 100% sure an IPS is required to be created. But I don’t remember reading about any other options for formalizing the agreement.
What are the answers for this one?
Dwight: All of the items listed above are true. Some of them conditionally affect IPS.
Darn it I am getting tired of getting the answer right and then second guessing myself and changing it to something wrong.