When to update an investment policy statement: eight triggers for small RIAs
An investment policy statement should be updated whenever something it describes changes: the client's goals, time horizon, risk tolerance, income needs or circumstances, the strategy or model the accounts follow, the accounts covered, or any restrictions. Many firms also review every IPS on a fixed cycle. Each update should be a new, dated version that keeps the old one, so you can show which IPS applied when.
The IPS was right the day it was signed. Two years later the client has retired, the firm has changed its conservative model twice, and one account has been closed. Nobody touched the IPS, so it now describes a client and a portfolio that don't exist.
When should an IPS be updated?
Whenever something the IPS describes changes. The eight common triggers:
| # | Trigger | Example |
|---|---|---|
| 1 | Goals change | Saving for a home becomes funding retirement income |
| 2 | Time horizon changes | Retirement brought forward by five years |
| 3 | Risk tolerance changes | The client is no longer comfortable with the volatility |
| 4 | Income or liquidity needs change | Regular withdrawals start |
| 5 | Life events | Marriage, divorce, inheritance, death in the family |
| 6 | Strategy or model changes | The account moves to a different model, or the model is revised |
| 7 | Accounts change | An account is opened, closed or transferred |
| 8 | Restrictions change | The client adds or removes an exclusion or a constraint |
On top of these, many firms review every IPS on a fixed cycle, so nothing goes years without a look.
How should an update be recorded?
- A new version, not an edit. Create a new dated version and keep the old one, marked superseded.
- Say what changed and why. A short note: the trigger, what was updated, who decided.
- Match the strategy record. If the strategy changed, its effective date should match the IPS version date.
- Client acknowledgment. Signature or written acknowledgment, as your procedures require.
- Set the next review date. So the cycle continues.
A worked example
Take a hypothetical household at a two-person RIA. In March the client retires early and starts monthly withdrawals. The adviser moves the accounts from a growth model to a balanced income model.
| Record | Before | After |
|---|---|---|
| IPS version | v2, signed 2025 | v3, dated 18 March, v2 marked superseded |
| Objective | Long-term growth | Income with moderate growth |
| Liquidity | None planned | Monthly withdrawals |
| Strategy | Growth model | Balanced income model, effective 18 March |
| Next review | Not set | March next year, or sooner if circumstances change |
Anyone looking later can see what changed, when, why, and which IPS applied to the trades on either side of 18 March.
Common gaps
- The model changes but the IPS still describes the old allocation.
- The IPS is edited in place, so the earlier version is lost.
- A life event is noted in the CRM but never reaches the IPS.
- No next review date, so the IPS drifts for years.
When is this overkill?
A minor change that the IPS doesn't describe, such as a new contact phone number, doesn't need a new version. The test is simple: if the IPS no longer matches reality, update it.
How Advorra fits
In Advorra, the IPS fills from the client's strategy, each version is kept with an audit trail, signed copies can be re-uploaded and activated, and a 36-month review clock shows which IPS documents are due. Strategy changes are dated in the Strategy Journal, so the IPS and the strategy record line up. See the product page, or read how to write an IPS and model versions and the strategy of record.
One thing to do this week: list every client whose strategy changed this year, and check each one's IPS was updated to match.
An operations guide, not investment or compliance advice.
Questions advisors ask
How often should an IPS be reviewed?
Many firms review on a fixed cycle, for example every year or every few years, as well as whenever a trigger event happens. Your procedures should set the cycle.
Does every model change need a new IPS?
If the IPS describes the model's allocation, benchmark or rules and those change, the IPS no longer matches. Either update it or write the IPS so it refers to the model and its versions.
Should the client sign the updated IPS?
Many firms ask for a signature or written acknowledgment on each new version. Your procedures and compliance consultant decide.
What do I do with the old version?
Keep it. Mark it superseded with the date, and keep it with the client's records.
Is this investment or compliance advice?
No. It is an operations guide. Investment decisions are the adviser's, and your procedures decide your review cycle.
See it on a demo firm
Advorra is practice software for independent RIAs: clients, models, IPS, billing and compliance records in one place, on top of the custodian you already use. Built by The CollabHub.
Get in touch