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Why So Many Forms?!

Piles of formsEvery two years we update our Investment Policy Statement (IPS). This is the document that states how we manage your investments, how we choose managers, and specifies your asset allocation. While we feel this document only needs updating when our policies change or your personal circumstances change, the SEC does not agree. Our compliance attorneys tell us they want it updated every two years. This makes a lot of unnecessary work for us and hassle for you.

Part of renewing the IPS is updating the risk tolerance questionnaire. We call this the “Finametrica” questionnaire, after the firm that developed it.  The questionnaire has 26 questions that help us evaluate and test your risk tolerance. While the questionnaire is helpful with new clients, it has limited use with existing clients. Once again, if it were up to us we would not include this with every update of the IPS, but SEC thinks otherwise. They want to see the risk tolerance evaluation regardless of how applicable it is to your situation. They are, after all, a government agency, so hopefully you understand.

So, we totally understand those of you who protest having to fill out yet another form. In most cases, we agree with you! Unfortunately, our regulatory burden just keeps getting heavier and heavier. We find ourselves spending an increasing amount of time and money complying and conforming with new regulations, many of which are the result of legislation passed by Congress with the intention of preventing another financial crisis. For the most part, the new regulations mainly serve to make us less effective and drive up the costs of our services.

With all that said, you can choose not to fill out the questionnaire and we will make a note of that in our files and in the IPS. Thank you for your understanding!

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