Investment Policy Guidelines: The Blueprint of your Portfolio

May 31, 2023

by Bailey O. Davis

Investment Policy Guidelines (IPGs) are crucial for long-term financial success by creating a foundation of trust between you and your advisor. An IPG is an important document to ensure that your investment plan addresses your goals and objectives.

Your IPG is the blueprint to your financial success, similar to how a contractor’s blueprint leads to a successful home build. Before building a new home, an architect knows exactly what his/her clients envision when it comes to their dream home. Through a series of open-ended discussions to learn about their clients’ goals, an architect should capture the desired future outcome within a blueprint. You and your investment advisor will follow a similar process when building your IPG, resulting in an effective document that benefits both parties of a client-advisor relationship.

This document typically outlines your plan objectives, responsibilities of both parties, investment targets, and portfolio monitoring strategies. Your financial advisor will create your IPG upon understanding your risk profile, matching your financial capacity with your tolerance for taking on additional risk. When executed correctly, your IPG should align your investment objectives with your financial plan to ensure you meet your long-term goals. The perfect IPG should include accountability, flexibility, and transparency.


An architect’s blueprint is helpful only if strictly followed throughout the entire project; sticking with the pre-created plan involves trust and discipline on both ends. The same goes for your IPG.

Our emotions inevitably play a large role when we make decisions. An IPG creates accountability for both parties to follow the agreed-upon directives to result in a successful outcome. By forming clear expectations, both parties remain disciplined during market fluctuations, which prevents deviation from the plan by eliminating the possibility of making emotionally driven or reactive decisions.


A blueprint aims to instruct a contractor to build a client’s envisioned home, detailing important information to reach this outcome. A blueprint also allows a contractor the flexibility to make minor adjustments as necessary during the construction process as unforeseen events arise.

An IPG works in a similar way by structuring the portfolio to stay within target boundaries, but does not specifically name where every dollar will be allocated. Your advisor has flexibility to take advantage of unique investment opportunities that are suitable for you, as long as they fall within the “guardrails” outlined in the IPG.


During the construction of a new home, you are there during every step of the way. A blueprint is created through collaboration among all parties, serving as an essential resource to reference throughout the construction process.

Full transparency includes clear communication for your plan of action between you and your advisor. By creating your IPG together, your advisor understands your future goals and the best route to get you there. On the other side, you have a clear view of your advisor’s execution plan, which hopefully provides greater peace of mind that everything is going as planned.

A well-constructed IPG is a living document, meaning it should be systematically reviewed and referenced when necessary. Change is inevitable, and we are often faced with situations that alter our plans. Expected changes, like retirement—or unexpected changes, such as death or disability of a partner—all warrant an updated IPG. Your advisor will walk you through the process to make necessary tweaks to your plan and draft your updated IPG. If executed and maintained successfully, your IPG will serve as a powerful tool to guide you towards achieving your goals.


Bailey O. Davis

Bailey O. Davis is a 2020 cum laude graduate of the University of South Carolina with a B.S. in Business Administration and a double major in Finance and Risk Management and Insurance. Bailey began working for Abacus as an intern in June 2015 and officially joined the team in May 2020.



Abacus is a financial advisory and investment counsel firm focused on serving families with shared assets from businesses to commercial real estate to oil and gas holdings. Managing over $1.7 billion on behalf of its 250-plus families, Abacus consists of a team of multi-disciplinary experts who work collaboratively to serve its clients.