How to Build a Long-Term Investment Policy Statement (IPS)
A well-structured Investment Policy Statement (IPS) is one of the most important tools for preserving and growing family wealth across generations. It serves as a roadmap, guiding investment decisions, defining responsibilities, and ensuring long-term discipline. At Famille Office, we help families create IPS frameworks that bring clarity, structure, and alignment to even the most complex multi-bank or multi-asset strategies (long-term investment policy statement).
An IPS begins by defining the purpose of the family’s wealth. Whether the goals include capital preservation, long-term growth, income generation, philanthropic objectives, or future generational support, clarity is essential. Without a clearly defined purpose, investment decisions tend to become fragmented or reactive. The IPS anchors all choices to the family’s long-term vision.
Next, the IPS describes the family’s risk tolerance and risk capacity. These two concepts are often confused, yet both are crucial. Risk tolerance reflects emotional comfort with volatility, while risk capacity assesses the family’s financial ability to absorb losses. Families with operating businesses, concentrated assets, or significant illiquid holdings may require conservative liquid portfolios—even if they feel comfortable taking risk. We guide families through structured discussions to translate risk into objective parameters.
The IPS then outlines the strategic asset allocation, defining the long-term mix of equities, fixed income, private markets, real estate, cash, and alternative investments. This allocation is the biggest driver of long-term performance. It must incorporate liquidity needs, generational timelines, obligations, and global exposure. Clear target ranges help maintain discipline and prevent emotional reactions during market volatility.
Governance and responsibilities are also defined within the IPS. The document outlines who makes decisions, who monitors performance, and how the family interacts with advisors, banks, and asset managers. For multi-bank families, this is especially important to avoid overlap, concentration risk, or conflicting strategies. Clear governance minimises confusion and reinforces accountability.
The IPS also specifies the approach to selecting and evaluating asset managers. Performance expectations, fee levels, benchmarks, and due-diligence processes are documented to ensure transparency and fairness. For families using multiple advisory relationships, the IPS becomes the central reference point that aligns all external parties.
Another essential component is the rebalancing policy. Markets fluctuate, and portfolios drift over time. Without a systematic rebalancing framework—whether calendar-based or threshold-based—risk levels can drift far from intended targets. Rebalancing enforces discipline and protects the family from unintended exposures.
The IPS may also include ethical, ESG, or impact-investment preferences. These values-based criteria help ensure that investments reflect the family’s identity and long-term purpose.
Finally, an IPS is a living document. Families evolve, businesses change, and markets shift. We recommend reviewing the IPS annually or after any major family event. Regular reviews ensure that the strategy remains aligned with the family’s circumstances and long-term ambitions.
At Famille Office, we support families in building Investment Policy Statements that are clear, actionable, and sustainable. With the right IPS, families gain structure, discipline, and strategic confidence—creating a foundation for long-term stability and multigenerational success.
