Canadian Securities Course (CSC) Level 2 Practice Exam

The creation of an investment policy statement (IPS) is fundamentally influenced by the client's approval because the IPS is tailored to reflect the client's financial goals, risk tolerance, investment preferences, and constraints. The client's input ensures that the IPS is aligned with their unique circumstances and aspirations, making it a foundational document in the portfolio management process.

The IPS serves as a guide for how a portfolio should be constructed and managed, so having the client's approval is crucial to ensure that the strategies laid out resonate with their expectations and needs. This alignment helps in establishing a clear understanding between the client and the investment manager, which is essential for a successful investment relationship.

Factors such as market trends, tax avoidance strategies, and performance evaluation are relevant in the broader context of portfolio management and could impact decision-making and adjustments to the portfolio over time. However, these considerations are secondary to the critical step of ensuring that the IPS reflects and has the approval of the client. The primary purpose of the IPS is to articulate the investment strategy in a way that satisfies the client’s objectives, making their approval a key part of the process.