CFA Level I · CFA Level I Exam · Basics of Portfolio Planning and Construction
Which statement about reviewing an IPS is most accurate?
An IPS should be reviewed periodically and also after major changes in the client's circumstances, such as a new liability, retirement or a change in wealth. Market swings alone are not a reason to rewrite it, but a fixed document would become stale.
- AIt should be revised whenever markets move sharply
- BIt should be reviewed periodically and after major changes in client circumstancesCorrect
- CIt is fixed at inception to protect the client from reacting emotionally
Explanation
An IPS is a living document, updated on a regular schedule and when the client's objectives or constraints change materially. Market moves alone do not justify revision, and a never-changing IPS would become outdated.
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