IPS Implementation Options Samples Tips and Tricks

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A successful investment is a bit more complicated business than simply having a great idea mixed with a “good” (or even the best) product and using an “outstanding” (the suggested “best” again) service. It is more like building a vision or objective then setting out a mission to achieve that particular goal.

There are a few basic terms to notice and a generic process to follow when doing comprehensive investment planning or implement an IPS.


Know Your Client: Gather detailed information about the clients' risk profile, investment knowledge, behavior and financial position. Both risk assessment tools and talks with the client required. None of them works as a stand-alone method. Respect compliance requirements like RDR or MiFID suitability rules.


Know Your Model: Your business model, the IPS or financial plan and client communication shall include the assumptions, parameters and algorithms applied and presented also as properly written disclosures and disclaimers (relevant and in plain English and meeting the compliance requirements).


Know Your Product: Some investment products exists for individuals, others for corporate clients and some can be chosen for both. In all cases, generating profit is a common aim. The investor and especially the advisor shall know well what product fits for which client and accordingly attach them to the client portfolios. The product profile (cp. KID Key Investor Information Document) shall be evaluated to best fit the portfolio Model which in turn best fit the client in question!


Paul Resnik gives you an excellent introduction on comprehensive Investment Advising in a short video.


 1. Roles in investment planning
   2. Planning for DIY clients
   3. Investment advisor (no execution)
   4. Asset manager
   5. Wealth manager
 6. Implementing the IPS: the process
   7. Evaluating current investments
   8. Doing the Risk Profile for the client
   9. Implementation (transaction view)


Roles in Investment Planning

Roles in investment planning can be categorized according to the following factors:


1. WHO is the decision maker in this business

2. Provider view: Client or service provider

3. All the roles to judge in the light of comprehensive and fiduciary planning, which is the ultimate benchmark for investment planning.


See the three vital elements of real financial planning on the following LINK.


Planning for DIY Clients


DIY : Do It Yourself is the kind of investment strategy where individual investors choose to look themselves and manage their own investment portfolios. They do the respective trading and transactions again by themselves. Only execution is tracked in this case with neither advice nor advisor! In US terminology: Discount or execution only broking is a simple dealing service. The broker does not offer any advice or portfolio management services. Some technical tips are included. Benefits: The power to take your own decisions and be your own fund manager. Threats: Fake advice, misinterpreting financial info and calculators, on the execution only platform, self-misselling.


Investment Advisor (No execution)


For this role, The Advisor exists with an investment Advice BUT he performs No Execution or Trading. For the investment advisory process the ESMA Guide. to apply on Collecting Information, Risk Profiling, Model Portfolios and their mapping and Product Selection (Security picking)

Paul Resnik reports in 130 seconds.

The investment decisions are still made by the client and based on investment advice from the above mentioned advisor. The implementation can be either done by an execution only platform OR by a broker. A comprehensive IPS is a quasi-standard , ie. a must. Based on Roman law, the Investment Advisor can be the representative of client who is entitled of acting thus performing transactions on behalf of the client. The usual solution is that the fiduciary investment advisors takes control on the behalf of the client of the non-fiduciary broker.


Asset Manager


Asset managers are individuals who are responsible for overseeing the performance of the financial assets of their clients. They can either work independently for private clients or for brokerage institutions. The Asset Manager recommends and monitors the performance of the products the client has in his financial portfolio based on the Planning Strategy drawn earlier. The objective is to increase the return on all assets/products selected without affecting the client’s risk tolerance determined.


Wealth Manager


Wealth Manager are entrusted financial advisors, a trustee of the client who looks after his whole wealth. He is the decision maker in behalf of his client (individuals or families) to ensure growth and avoid loss. In this case, clients do not want to take care of their own wealth for several reasons. Based on regulations and Model of business Role, the WM can be a Private Banker, a Wealth Manager, a Trustee or this mandate can be done in a Family Office.


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