Investment Policy Statement - Sample Plan (for reference only)

Investment Policy Statement
- Sample Plan (for reference only)
John Doe IRA
Prepared on March 30, 2009
Prepared by
Brent Mason
Charles W. Mason
7474 N. Figueroa St
Los Angeles CA 90041
323-254-3072
[email protected]
Cover Pages
Planning Reports
Appendices
Cover Pages
1
Table of Contents
2
Introduction
3
Client Information
3
Statement of Objectives
3
Risk Profile
3
Current Accounts
3
Current Allocation
4
Constraints
4
Miscellaneous Expenses
4
Asset Allocation
4
Current vs. Target Allocation
4
Investments
4
Investment Evaluation & Selection
4
Proposed Portfolio
5
Investment Strategy Analysises
5
Allocation Comparison
5
Equity Investment Style
5
U.S. Stock Sector Analysis
6
Regional Exposure
6
Fixed-Income Investment Style
7
Credit Quality
7
Interest-Rate Risk
7
Mutual Fund Fees and Expenses
7
Performance
7
Risk and Return Statistics
7
MPT Statistics
8
Implementation Plan
8
Action Plan
8
Monitoring Your Progress
8
Legal & Regulatory
9
Agreement
9
Appendices
9
Performance of Proposed Securities
Risk Tolerance Questionnaire
9
10
Data as of 3/30/2009
Page 3 of 10
John Doe IRA
Investment Policy Statement
Introduction
The Investment Recommendation is a detailed list of the changes recommended to your current portfolio holdings. The recommended list of funds,
stocks, and/or other investments has been selected in order to implement a new asset allocation policy with either a higher potential return than
your current allocation, a lower level of risk, or a combination of both. This report also provides a high-level analysis to help you understand the
overall effects of the recommendations on your equity and fixed-income exposure.
Client Information
Client Profile
Name
Birth Date
Relationship
Gender
State of Residence
John Doe
1/1/1950
Primary Member
Statement of Objectives
Risk Profile
Your risk tolerance is scored based on three factors that
impact investing decisions: time horizon, long-term goals
and expectations, and short-term risk attitudes. The
graph above illustrates your risk tolerance.
Risk Questionnaire and Advisor Select Results
Risk Profile Score from Questionnaire
Investing Horizon
0 - 1 Years
Advisor Selection
1 - 5 Years
5 - 10 Years
10 - 20 Years
20 + Years
Long-term Volatility
Tolerance
Very Conservative
Conservative
Moderate
Moderately Aggressive
Aggressive
Short-term Volatility
Tolerance
Very Conservative
Conservative
Moderate
Moderately Aggressive
Aggressive
Overall Risk
Tolerance
Very Conservative
Conservative
Moderate
Moderately Aggressive
Aggressive
Very Conservative The very conservative range is designed for the cautious investor, one with a low risk tolerance and/or a short time horizon. It is targeted toward the investor
seeking investment stability and liquidity from their investable assets. The main objective of the individual in the conservative risk range is to preserve capital while providing income.
Fluctuations in the values of portfolios within this range are minor.
Conservative The conservative risk range is appropriate for the investor who seeks both modest capital appreciation and income from their portfolio. This investor will have either
a moderate time horizon or a slightly higher risk tolerance than the most conservative investor in the previous risk range. While this range is still designed to preserve the investor's
capital, fluctuations in the values of portfolios may occur from year to year.
Moderate This range will best suit the investor who seeks relatively stable growth from their investable assets offset by a low level of income. An investor in the moderate risk
range will have a higher tolerance for risk and/or a longer time horizon than either of the previous investors. The main objective of an individual within this range is to achieve steady
portfolio growth while limiting fluctuations to less than those of the overall stock markets.
Moderately Aggressive The moderately aggressive risk range is designed for investors with a relatively high tolerance for risk and a longer time horizon. These investors have little
need for current income and seek above-average growth from their investable assets. The main objective of this risk range is capital appreciation, and its investors should be able to
tolerate moderate fluctuations in their portfolio values.
Aggressive This range is appropriate for investors who have both a high tolerance for risk and a long investment time horizon. The main objective of the aggressive risk range is to
provide high growth for the investor's assets without providing current income. Portfolios in this range may have substantial fluctuations in value from year to year, making this category
unsuitable for those who do not have an extended investment horizon.
Your risk tolerance is scored based on three factors that impact investing decisions: time horizon, long-term goals and expectations, and short-term
risk attitudes. This graph illustrates your risk tolerance.
Current Accounts
Account Name
John Doe IRA
Owner
John Doe
FINRA Members: For internal use or client reporting purpose only.
© 2009 All Rights Reserved.
Account Type
Traditional IRA
Value (USD)
1,000,000
Data as of 3/30/2009
Page 4 of 10
Investment Policy Statement
Prepared for
Prepared by
John Doe IRA
John Doe
Brent Mason
Current Allocation
Asset Class
US Large Cap Growth
US Large Cap Value
US Mid Cap Growth
US Mid Cap Value
US Small Cap Growth
US Small Cap Value
Non-US Dev Stk
Non-US Emrg Stk
US Inv Grade Bonds
US High Yield Bonds
Non-US Dev Bonds
Cash
Real Estate
Commodities
Current %
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
100.00
0.00
0.00
Tax-Advantaged %
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
100.00
0.00
0.00
Taxable %
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Constraints
Miscellaneous Expenses
Description
Begin Year
End Year
Amount (USD)
Inflation Adjusted
Inflation
Growth Rate (%)
Asset Allocation
Current vs. Target Allocation
Current
Target
Asset Classes
US Large Cap Growth
US Large Cap Value
US Mid Cap Growth
US Mid Cap Value
US Small Cap Growth
US Small Cap Value
Non-US Dev Stk
Non-US Emrg Stk
US Inv Grade Bonds
US High Yield Bonds
Non-US Dev Bonds
Cash
Real Estate
Commodities
Standard Deviation
Expected Return
Yield
Sharpe Ratio
Current %
Target %
+/- %
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
100.00
0.00
0.00
9.00
13.00
3.00
3.00
3.00
9.00
3.00
3.00
19.00
5.00
5.00
5.00
10.00
10.00
9.00
13.00
3.00
3.00
3.00
9.00
3.00
3.00
19.00
5.00
5.00
-95.00
10.00
10.00
2.95
2.82
2.82
0.96
11.63
9.53
3.42
0.82
8.68
6.71
0.60
-0.14
Investments
Investment Evaluation & Selection
In addition to the asset allocation discussed previously, the preferences listed below have been used to select securities to fulfill your investment
plan:
FINRA Members: For internal use or client reporting purpose only.
© 2009 All Rights Reserved.
Data as of 3/30/2009
Page 5 of 10
Investment Policy Statement
Prepared for
Prepared by
John Doe IRA
John Doe
Brent Mason
Proposed Portfolio
Security Name
Fidelity Emerging Markets
Dodge & Cox Income
Fidelity Large Cap Value
Artisan Mid Cap Value
T. Rowe Price Equity Income
T. Rowe Price New Income
PIMCO Total Return A
Dodge & Cox Stock
Artisan Small Cap Value
T. Rowe Price Small-Cap Value
T. Rowe Price U.S. Bond Index
American Funds Capital World Bond F-1
MGD Futures - Winton
GRUBB & ELLIS HEALTHCARE REIT INC
Security
Type
FO
FO
FO
FO
FO
FO
FO
FO
FO
FO
FO
FO
OT
OT
Ticker
FEMKX
DODIX
FSLVX
ARTQX
PRFDX
PRCIX
PTTAX
DODGX
ARTVX
PRSVX
PBDIX
WBFFX
WIN
Currency
Amount (USD)
53,091.40
80,000.00
80,000.00
34,240.10
80,000.00
80,000.00
62,068.50
80,000.00
80,000.00
73,610.40
23,458.80
73,530.80
100,000.00
100,000.00
% Allocated
to Portfolio
5.31
8.00
8.00
3.42
8.00
8.00
6.21
8.00
8.00
7.36
2.35
7.35
10.00
10.00
Investment Strategy Analysises
Allocation Comparison
Current
Target
Proposed
Asset Classes
US Large Cap Growth
US Large Cap Value
US Mid Cap Growth
US Mid Cap Value
US Small Cap Growth
US Small Cap Value
Non-US Dev Stk
Non-US Emrg Stk
US Inv Grade Bonds
US High Yield Bonds
Non-US Dev Bonds
Cash
Real Estate
Commodities
Current %
Target %
Proposed %
+/- %
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
100.00
0.00
0.00
9.00
13.00
3.00
3.00
3.00
9.00
3.00
3.00
19.00
5.00
5.00
5.00
10.00
10.00
5.41
11.00
3.82
5.60
6.19
6.42
4.00
3.59
19.85
1.60
5.97
5.80
10.70
10.04
-3.59
-2.00
0.82
2.60
3.19
-2.58
1.00
0.59
0.85
-3.40
0.97
0.80
0.70
0.04
To help you understand the proposed changes to your asset allocation, we're presenting a side-by-side comparison of your current and recommended
asset mixes.
Equity Investment Style
Current %
Proposed %
—
—
16
10
10
7
6
—
Growth
Not Classified 100%
9
13
Value
Blend
8
Small
—
Blend
Small
—
Value
Mid
—
22
Large
—
Mid
—
Large
—
Growth
Not Classified 0%
The Morningstar U.S. Equity Style Box shows how your U.S. stock holdings are classified in terms of the size of companies (large, medium, and
small) and their price characteristics (value, blend, and growth).
FINRA Members: For internal use or client reporting purpose only.
© 2009 All Rights Reserved.
Data as of 3/30/2009
Page 6 of 10
Investment Policy Statement
Prepared for
Prepared by
John Doe IRA
John Doe
Brent Mason
U.S. Stock Sector Analysis
Sector Weightings
Current %
Proposed %
Information Economy
—
17.14
Software
Hardware
Media
Telecommunication
—
—
—
—
3.18
6.63
3.37
3.96
Service Economy
—
45.50
Healthcare Services
Consumer Services
Business Services
Financial Services
—
—
—
—
10.79
6.60
10.62
17.50
Manufacturing Economy
—
37.35
Consumer Goods
Industrial Goods
Energy
Utilities
—
—
—
—
6.46
14.79
12.08
4.01
Benchmark: S&P 500
0%
10
20
30
40
50
60
70
80
90
100
Drilling down past the fund level, the sector analysis summarizes your domestic allocation across 12 sectors. In most cases, the proposed
percentages will bring you closer to the benchmark allocations.
Regional Exposure
% of Assets
Americas
North America
Latin America
Greater Europe
United Kingdom
Europe-Developed
Europe-Emerging
Africa/Middle East
Greater Asia
Japan
Australasia
Asia-Developed
Asia-Emerging
Current Portfolio %
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Bmark %
99.97
99.97
0.00
0.00
0.00
0.00
0.00
0.00
0.03
0.00
0.03
0.00
0.00
Proposed Portfolio %
Bmark %
86.89
84.09
2.80
6.96
1.78
1.97
1.19
2.02
6.15
0.92
0.16
2.58
2.49
99.97
99.97
0.00
0.00
0.00
0.00
0.00
0.00
0.03
0.00
0.03
0.00
0.00
Investing overseas can provide valuable diversification. The Regional Exposure percentages above reveal the geographical distribution of stocks in
your portfolio.
FINRA Members: For internal use or client reporting purpose only.
© 2009 All Rights Reserved.
Data as of 3/30/2009
Page 7 of 10
Investment Policy Statement
Prepared for
Prepared by
John Doe IRA
John Doe
Brent Mason
Fixed-Income Investment Style
—
—
—
Short
Interm
Avg Eff Maturity (Yrs)
-
Avg Credit Quality
-
28
Long
26
0
0
0
0
0
0
Short
Not Classified 100%
46
Interm
Proposed %
Avg Eff Duration (Yrs)
4.00
Avg Eff Maturity (Yrs)
6.29
Avg Credit Quality
AA
Low
—
-
Med
—
Avg Eff Duration (Yrs)
Low
—
Med
—
Current %
High
—
High
—
Long
Not Classified 0%
The Morningstar Fixed-Income Style Box shows how your bond holdings are classified in terms of their credit quality (high, medium, low) and the
duration of the bonds (short, intermediate, and long-term). In general, the riskiness of any one category increases as you move from the top-left
corner to the lower-right corner.
Credit Quality
Proposed
B
BB
BBB
A
AA
AAA
Low
High
Bond issuers promise payments, measured as yield, to investors. Bond issuers receive credit quality ratings based on their estimated ability to
make payments. As a rule, the risk of default decreases as you move from left to right on this scale, but so does the yield.
Interest-Rate Risk
Current
Proposed
Low Risk
Medium Risk
High Risk
The duration of your bonds determines the risk of holding them while interest rates rise and fall. The shorter the duration, the less the interest-rate
risk.
Mutual Fund Fees and Expenses
Your Average Mutual Fund Expense Ratio
Estimated Annual Mutual Fund Expenses
Current Funds
-
Proposed Funds
0.80
0.79
Average US Funds
1.37
0.00
Overall expenses are a major factor in the long-term performance of mutual funds. In general, the lower your average expense ratio the better.
Performance
Trailing Returns
3 Months
1 Year
3 Year
5 Year
10 Year
Current %
0.00
0.00
0.00
0.00
0.00
Proposed %
-8.97
-31.38
-8.33
-0.81
4.91
Risk and Return Statistics
Standard Deviation
Mean
Sharpe Ratio
3 Yr
Current
0.00
0.00
0.00
FINRA Members: For internal use or client reporting purpose only.
© 2009 All Rights Reserved.
Proposed
12.72
-8.33
-0.89
5 Yr
Current
0.00
0.00
0.00
Proposed
10.95
-0.81
-0.31
10 Yr
Current
0.00
0.00
0.00
Proposed
9.87
4.91
0.21
Data as of 3/30/2009
Page 8 of 10
Investment Policy Statement
Prepared for
Prepared by
John Doe IRA
John Doe
Brent Mason
MPT Statistics
Alpha
Beta
R-squared
3 Yr
Current
0.00
0.00
0.00
5 Yr
Current
0.00
0.00
0.00
Proposed
1.64
0.72
93.99
10 Yr
Current
0.00
0.00
0.00
Proposed
2.55
0.72
92.50
Proposed
4.60
0.54
76.52
Implementation Plan
Action Plan
Security Name
Ticker
Pershing Government Account
Fidelity Emerging Markets
Dodge & Cox Income
Fidelity Large Cap Value
Artisan Mid Cap Value
T. Rowe Price Equity Income
T. Rowe Price New Income
PIMCO Total Return A
Dodge & Cox Stock
Artisan Small Cap Value
T. Rowe Price Small-Cap Value
T. Rowe Price U.S. Bond Index
American Funds Capital World Bond F-1
MGD Futures - Winton
GRUBB & ELLIS HEALTHCARE REIT INC
PGR
FEMKX
DODIX
FSLVX
ARTQX
PRFDX
PRCIX
PTTAX
DODGX
ARTVX
PRSVX
PBDIX
WBFFX
WIN
Current
USD
1,000,000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Current
%
100.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Proposed
USD
0
53,091
80,000
80,000
34,240
80,000
80,000
62,069
80,000
80,000
73,610
23,459
73,531
100,000
100,000
Proposed
%
0.00
5.31
8.00
8.00
3.42
8.00
8.00
6.21
8.00
8.00
7.36
2.35
7.35
10.00
10.00
Action
Type
Sell
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Buy
Action
USD
1,000,000
53,091
80,000
80,000
34,240
80,000
80,000
62,069
80,000
80,000
73,610
23,459
73,531
100,000
100,000
No. of
Shares
1,000,000
4,100
6,873
11,065
2,800
5,413
9,292
6,139
1,235
8,584
3,660
2,221
4,115
100,000
10,000
Action
%
100.00
5.31
8.00
8.00
3.42
8.00
8.00
6.21
8.00
8.00
7.36
2.35
7.35
10.00
10.00
To implement these investment recommendations, you will need to set your overall portfolio to the following positions for the securities listed
above.
Monitoring Your Progress
This investment recommendation is based on your current situation, your resources, and your goals. In addition, it is based on our current expectations
of the behavior of asset classes included in your asset allocation. Your situation and goals will change over time, as will reasonable performance
projections. Other securities may become more appropriate for you over time. Your portfolio should be re-evaluated at least annually to ensure that
you are making solid progress toward your goals. In the meantime, please make every effort to update your advisor when substantial changes in
your goals or situation take place.
The performance of the securities selected for your portfolio will be monitored on an ongoing basis. Periods of underperformance are not unusual
or alarming for an individual security or an asset class as a whole. Our intent in monitoring performance is to ensure that 1) you continue to be on
track to achieve your goals, 2) over a reasonable period your investments produce acceptable return in relation to risk, 3) securities contribute to
the portfolio as anticipated, and 4) the portfolio continues to feature an acceptable level of risk. If we have concerns about the performance of your
securities, we'll contact you to discuss these concerns and necessary changes. Likewise, if you have concerns about the performance of your
portfolio, please let us know.
At times, out performance of some securities and underperformance of others may result in the need to rebalance your portfolio to maintain a
comfortable level of risk. We anticipate that this may need to be done at least annually.
FINRA Members: For internal use or client reporting purpose only.
© 2009 All Rights Reserved.
Data as of 3/30/2009
Page 9 of 10
Investment Policy Statement
Prepared for
Prepared by
John Doe IRA
John Doe
Brent Mason
Legal & Regulatory
The information contained in this report is not guaranteed to be accurate, complete or timely. Neither your advisor nor anyone who helped your
advisor create or populate this report, including, but not limited to, any software or information provider, shall be liable for any damages or losses
related to your use of the information contained in it.
Agreement
I have reviewed and agree with the tenets of this Investment Policy Statement. I will notify Brent Mason of any changes to my information, risk
tolerance, goals, or investments. This policy will be reviewed annually.
Client Signature
Date
Client Signature
Date
Advisor Signature
Date
Appendices
Performance of Proposed Securities
Investment Name
Symbol
GRUBB & ELLIS HEALTHCARE REIT INC
MGD Futures - Winton
T. Rowe Price Equity Income
Fidelity Large Cap Value
T. Rowe Price New Income
Dodge & Cox Income
Dodge & Cox Stock
Artisan Small Cap Value
T. Rowe Price Small-Cap Value
American Funds Capital World Bond F-1
PIMCO Total Return A
Fidelity Emerging Markets
Artisan Mid Cap Value
T. Rowe Price U.S. Bond Index
TRPLE0994
WIN
PRFDX
FSLVX
PRCIX
DODIX
DODGX
ARTVX
PRSVX
WBFFX
PTTAX
FEMKX
ARTQX
PBDIX
Morningstar 1 Month
Rating
%
N/A
N/A
-12.45
-13.36
-0.46
-1.68
-13.28
-10.43
-12.29
-2.44
-0.87
-5.48
-8.28
-0.37
FINRA Members: For internal use or client reporting purpose only.
© 2009 All Rights Reserved.
3 Month
%
N/A
N/A
-21.85
-21.20
3.03
5.30
-19.40
-12.51
-17.97
1.03
3.49
-7.50
-6.59
2.46
1-Yr
Annualized
N/A
N/A
-46.13
-48.75
-0.58
-2.07
-51.25
-36.68
-40.12
-9.89
0.59
-63.41
-37.05
2.19
3-Yr
Annualized
N/A
N/A
-16.10
-18.64
3.82
2.77
-20.20
-13.24
-15.70
2.43
5.19
-16.29
-11.45
4.87
5-Yr
10-Yr
Annualized Annualized
N/A
N/A
N/A
N/A
-6.69
-0.09
-6.63
N/A
3.49
5.12
2.60
5.16
-8.33
2.30
-1.89
7.58
-3.15
6.79
3.27
5.25
4.24
5.85
1.53
6.27
-0.41
N/A
3.82
N/A
Since
Inception
N/A
N/A
8.87
-3.22
7.60
7.24
9.71
5.95
9.36
6.56
6.32
1.90
4.88
5.36
Data
as of date
2/28/2009
2/28/2009
2/28/2009
2/28/2009
2/28/2009
2/28/2009
2/28/2009
2/28/2009
2/28/2009
2/28/2009
2/28/2009
2/28/2009
2/28/2009
2/28/2009
Data as of 3/30/2009
Page 10 of 10
Investment Policy Statement
Prepared for
Prepared by
John Doe IRA
John Doe
Brent Mason
Risk Tolerance Questionnaire
Time Horizon
Your current situation and future income
needs.
What is your current age?
Less than 45
45 to 55
56 to 65
66 to 75
Older than 75
When do you expect to start drawing income?
Not for at least 20 years
In 10 to 20 years
In 5 to 10 years
Not now, but within 5 years
Immediately
Long-Term Goals and Expectations
Your views of how an investment should
perform over the long term.
What is your goal for this investment?
To grow aggressively
To grow significantly
To grow moderately
To grow with caution
To avoid losing money
Assuming normal market conditions, what would you expect
from this investment over time?
To generally keep pace with the stock market
To slightly trail the stock market, but make a good profit
To trail the stock market, but make a moderate profit
To have some stability, but make modest profits
To have a high degree of stability, but make small profits
Suppose the stock market performs unusually poorly over the
next decade, What would you expect from this investment?
To lose money
To make very little or nothing
To make out a little gain
To make a modest gain
To be little affected by what happens in the stock market
Short-Term Risk Attitudes
Your attitude toward short-term volatility.
Which of these statements would best describe your attitudes
about the next three years' performance of this investment?
I don't mind if i lose money
I can tolerate a loss
I can tolerate a small loss
I'd have a hard time tolerating any losses
I need to see at least a little return
Which of these statements would best describe your attitudes
about the next three months' performance of this investment?
Who cares? One calendar quarter means nothing
I wouldn't worry about losses in that time frame
If i suffered a loss of greater than 10%, i'd get concerned
I can only tolerate small short-term losses
I'd have a hard time stomaching any losses
The Risk Assessment Questionnaire helps determine the most appropriate asset mix for a specific level of risk tolerance.
FINRA Members: For internal use or client reporting purpose only.
© 2009 All Rights Reserved.