You have a new client, it is time to make investment decisions and you want to reduce professional liability exposure; what should be created for each client?

Question

Quizplus · Accepted Answer

To avoid professional liability exposure with a new client, an investment policy statement must be created. This policy creates a structure for making investment decisions and managing the investor's portfolio. It establishes risk and return objectives. It determines constraints: time horizon, tax consequences, liquidity needs, regulations, and unique client needs. It establishes a standard of agreed-upon goals and other criteria's against which investment performance can be measured. And it provides the documentation to reduce professional liabilities showing prudent procedures were followed while making investment decisions.

You Have a New Client, It Is Time to Make