Writing IPS

Return objective:
Keep focus on long term objective
Talk about: a) Any Short term needs
b) If the client's return is unrealistic, need to be educated of it
c) Overall shall reflect long term direction
e.g. Focus: growth vs income, also whether it is Long term capital growth focus vs short term safety

Risk:

- Compare client's willingness to ability (financial situation etc)
- Educate client if necessary of their real ability -> look at actions more than words
: write like average, below average and above average
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Constraints:

Liquidity: Talk about small emergency cash reserve whether stated explicitly or not
b) Regular cash need from portfolio
c) One time cash need

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Time horizon: pre retirement, following retirement ec

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Tax: loss carryforward etc, tax bracket...

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Legal etc

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Unique:
Specific to job, correlatons etc



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Insurance company IPS:

a) Surplus requirement: could threaten confidence in insurance company if not treated seriously
b) Ensure duration match between ALM, otherwise could have forced sale of assets at times
c) segmentation: group similar duration or interest rate sensitivity characteristics together: reduces regulatory concerns as well
d)Surplus portfolio focus: long term growth
e)

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Bank IPS:
Securities portfolio vs loan portfolio: the two balance each other in terms of duration, riskiness, liquidity etc to meet liabilities