Advisor Advocate - News & Information

Compliance FAQs: IPS Statements

In addition to our quarterly compliance webinar series, we provide frequently asked compliance-related questions on a monthly basis.

The answers to these questions, provided by Lexington Compliance, give insight into compliance concerns of registered investment advisors.

For example:

What is an IPS Statement?

Many states have adopted the verbiage IPS (Investor Profile or Investment Planning Statement) in their rules regarding the required “suitability” information that must be collected by advisers. Since registered investment advisors are fiduciaries, they are expected to exceed the basic know-your-client (KYC) standards that broker-dealer registered representatives are held to.

Every advisory firm needs to develop a method of obtaining and documenting information concerning three aspects of an RIA-client relationship.

  1. Where is the client now (demographics and tolerances)
  2. Where does the client want to go (needs, wants, goals, desires, and restrictions)
  3. The RIA’s recommended plan to help the client reach his or her goals

A good IPS clearly defines the expectations and roles of the client, the adviser and the custodian or other authorized third party.

To learn how Lexington Compliance can help you understand investor profile or investment planning statements, please visit Talk to your dedicated relationship team at 877-726-8741 or about the free basic compliance hotline* provided to Scottrade advisors by Lexington Compliance.

Regulation and compliance are complex and ever-changing, so you should consult your compliance officer or legal counsel for advice specific to the needs of your practice.

*The scope of this service will include basic questions about the operation of a registered investment advisor and related compliance and registration areas. If an inquiry requires extensive research, significant review of materials or drafting of materials, then Lexington will offer its standard compliance consulting packages for a fee. If you choose to retain Lexington for compliance consulting services that are outside the scope of the hotline, you are responsible for making all required payments. Scottrade and Lexington are not affiliated. Scottrade is not responsible for statements, offers or products issued by Lexington. Please research any product or service carefully before making a purchase.

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