Investment Policy Statement (IPS)
An investment policy statement is the written agreement between an adviser and a client setting out how the portfolio will be managed: objectives, risk tolerance, target allocation, constraints, and review cadence. It is not filed with any regulator. It is retained by the firm, and examiners ask for it because it is the standard the firm's own conduct gets measured against.
Caddi AI agents generate the IPS from data you hold and flag drift from the actual portfolio. Free to try.
- Who handles it
- Investment advisers maintain an IPS per client or per account. There is no filing; the document is retained and periodically reviewed with the client.
- Filed through
- Retained by the firm
- Applies to
- SEC-registered RIA, State-registered RIA, Dually registered
What the form asks for
- Client objectives and time horizon
- Risk tolerance and capacity
- Target asset allocation and permitted ranges
- Permitted and prohibited investments, and any client constraints
- Rebalancing policy and tolerance bands
- Roles and responsibilities of adviser and client
- Review cadence and reporting expectations
The work behind the filing
Detect drift between the IPS and the actual portfolio
The IPS states a target allocation with tolerance bands. The portfolio moves. Nobody notices the account has been outside its own stated bands for two quarters until an examiner reads the document and then the holdings. Caddi can compare the stated policy against live positions and surface the accounts that have drifted.
Generate the IPS from data you already hold
Most of an IPS is client facts and allocation targets that already exist in the CRM and the portfolio system. Producing the document is assembly work, not judgment work. Caddi can populate the template per client and route the draft for advisor review.
Keep the review cadence the document promises
An IPS that says it will be reviewed annually and has not been reviewed in three years is worse than no IPS, because the firm documented a standard and then missed it. Caddi can track the stated cadence per client and open the review when it comes due.
Want help automating the filing and filling of these forms?
- Caddi fills the form with data pulled from Addepar, Tamarac, Black Diamond, and Wealthbox.
- It checks every field against the client record and the last filing, then hands your team a finished form to sign off and submit.
FAQs
5
What is an investment policy statement?
An investment policy statement is the written agreement between an adviser and a client setting out portfolio objectives, risk tolerance, target allocation, constraints, and review cadence.
Is an investment policy statement filed with the SEC?
No. An IPS is not filed with any regulator. It is retained by the firm, though examiners commonly ask to see it and compare it against how the account was actually managed.
Is an IPS required?
It is not a filing requirement in the way Form ADV is. Whether one is required depends on the firm's own policies, the account type, and applicable standards, but firms that maintain one are then held to what it says.
Why does IPS upkeep drift?
Because there is one per client or per account, the review cadence is whatever each document itself commits to, and the documents live in a folder structure rather than a system that tracks them. The common failure is not the absence of a cadence but losing track of the one already promised in writing.
Does Caddi file this form for me?
No. Caddi does not submit filings to IARD, FINRA Gateway, EDGAR, or any regulator, and it is not a substitute for your compliance program or your CCO. Caddi automates the work around the filing: gathering the underlying data out of your portfolio, CRM, and document systems, reconciling it against the prior filing, flagging what changed, and evidencing delivery. A human still reviews and files.
Related forms
This page describes what the form is and the work it creates. For requirements, deadlines, and whether any of it applies to your firm, see SEC — Investment adviser regulation and examination resources.