Your Investment Policy Statement (IPS) is an important, well-conceived written document that is tailored to your specific needs and clearly defines your objectives and constraints over a relevant, explicitly stated investment time horizon.

The IPS is the foundation of managing your investments and serves as a structured decision-making process for your investment decisions. This helps to balance return seeking and risk taking; and increases the probability of success in achieving your long-term investment goals. It provides a long-term investment discipline, rather than one that is
based on ad hoc revisions spurred by overconfidence or panic in reaction to short-term market fluctuations. The absence of a written policy reduces decision making to emotional knee-jerk reactions often leading to chasing short-term opportunities that will detract from reaching long-term goals. The IPS helps to maintain your focus on the long-term nature of the investment process, especially during turbulent or exuberant times.

You (with the help of your advisor) are responsible for establishing your own investment policy. Once established, it is then the advisor's role to help you follow that policy. No changes should be made until there is a material change in your personal or financial circumstances. Your IPS normally doesn't change in response to market moves, and should be long-term to prevent arbitrary or impulsive revisions.

Your IPS helps clarify issues of importance and concerns to both parties.