DID YOU KNOW...

Most successful businesses have written policies and procedures that define typical activities within the organization. Usually these procedures outline responsibilities, set limits, and provide directions regarding certain conditions on business activities. A well-defined and written policy statement is imperative so that a non-owner or manager may continue the same business actions or processes that occur today.

But surprisingly many of these same business owners and executives do not have these same types of measures in place for their own personal investments. Similar to business procedures, an Investment Policy Statement (IPS) defines your investment theory and sets the various parameters about how the investments and distributions will be managed on an ongoing basis. They define limits and establish predefined actions when certain conditions are met. It is important that the Investment Policy Statement be broad enough to handle unexpected situations but specific enough that there is little doubt about what to do when those situations arise.

Finally an Investment Policy Statements should be review occasionally to make sure the processes are efficient and still align with the original goal. Many investors fail to adjust their investment programs as their personal situation changes which increase unwarranted risk into the investments.t

By Donnie Roberts Vice President and Trust Officer Woodway Financial Advisors and a Silver Fox Associates