Competency
In this project, you will demonstrate your mastery of the following competencies:
- Analyze investment needs and asset allocation strategies
- Create investment portfolio recommendations
Scenario
For this project, you are a portfolio manager who works with many clients. Using your knowledge of investments and current market factors, you will recommend specific investment options based on the client’s goals and risk tolerance. Recognize that clients may not be aware of their ability to manage risk nor how it aligns with their life objectives. As a portfolio manager, you will build relationships with your clients that will allow you to recognize their risk tolerance and communicate when their portfolio may not coincide with their goals.
Use the learning from your milestone assignments, along with your knowledge of investments, to research and create an investment policy statement based on the factors above.
Directions
Using a client profile from the High-Level Profiles document provided in the Supporting Materials section, create an investment policy statement based on the Project Two Portfolio Calculation Template. To complete this project, you must address the following rubric criteria:
Part One: For Part One of this project, you will do the needed calculations and research to inform your investment policy statement. You will include a written summary that is supported by appropriate calculations.
- Interpret a client’s current portfolio to identify the asset allocation strategy. Address the following in your response:
- Investments currently held
- Alignment with client profile
- Determine the client’s investment objective(s). Address the following in your response:
- Gaps between current financial state and goals
- Investment needs (e.g., education, retirement, business venture)
- Future plans
- Analyze how current economic factors influence specific investment options that align to the client’s goals. Address the following in your response:
- Inflation
- Current political status
- Global events
- Analyze how the state of the current markets influences specific investment options that align to the client’s goals. Address the following in your response:
- Use the U.S stock market, the international stock market, the U.S. bond market, and the commodities market.
- Identify the state-attractiveness.
- Support the selection of investment options.
- Forecast potential market impacts on portfolio recommendations, using the portfolio calculation template. Address the following calculations in your response:
- Future trends
- Historical data
- Multiple time horizons
- Measure the risk of different asset allocation strategies, using appropriate calculations in the portfolio calculation template. Address the following in your response:
- Risk of individual investments and impact on portfolio
- Risk of portfolio
- Compare asset allocation strategies and their risks with a client’s risk tolerance. Address the following in your written summary:
- Risk optimization (minimize, maximize, etc.)
- Strategies for asset allocation (age-based, life-cycle funds, constant-weight, tactical, insured, and dynamic)
- Goal factors
- Time horizon
Part Two: In this part of the project, you will create an investment policy statement that highlights your recommendations based on your previous findings.
- Recommend an asset allocation strategy that best fits the client’s needs in the form of an investment policy statement. Address the following in your statement on why that asset allocation strategy is the best fit:
- Viability, stability
- Tax efficiency
- Level of risk and alignment with client’s risk tolerance
- Alignment with client’s goals
- Expected return and client’s needs
- Withdrawal requirements
What to Submit
To complete this project, you must submit the following:
Investment Policy Statement
This project requires two deliverables, a completed Excel spreadsheet using the Project Two Portfolio Calculation Template and a 3- to 5-page Microsoft Word document.
- The Project Two Calculation Template contains formulas used in the investment allocations.
- A 3- to 5-page Microsoft Word document supporting adjustments within the investment policy statement should use 12-point Times New Roman font, double spacing, and one-inch margins. Sources should be cited according to APA style.
Supporting Materials
The following resource may help support your work on the project:
Profile Options: Project Two High-Level Profiles
Use these profiles to create your investment policy statement.
Project Two Investment Policy Statement Rubric
| Criteria | Exemplary (100%) | Proficient (85%) | Needs Improvement (55%) | Not Evident (0%) | Value |
| Current Portfolio | Exceeds proficiency in an exceptionally clear, insightful, sophisticated, or creative manner | Interprets a client’s current portfolio to identify the asset allocation strategy, including investments currently held and alignment with client profile | Shows progress toward proficiency, but with errors or omissions; areas for improvement may include details related the client’s portfolio or asset allocation strategy | Does not attempt criterion | 5 |
| Client Investments | Exceeds proficiency in an exceptionally clear, insightful, sophisticated, or creative manner | Determines the client’s investment objective(s), including gaps between current financial state and goals, investment needs, and future plans | Shows progress toward proficiency, but with errors or omissions; areas for improvement may include details related to investment objectives(s) | Does not attempt criterion | 10 |
| Current Economic Factors | Exceeds proficiency in an exceptionally clear, insightful, sophisticated, or creative manner | Analyzes how current economic factors influence specific investment options that align to the client’s goals, including inflation, current political status, and global events | Shows progress toward proficiency, but with errors or omissions; areas for improvement may include details related to how current economic factors influence investment options | Does not attempt criterion | 10 |
| Current Market Influences | Exceeds proficiency in an exceptionally clear, insightful, sophisticated, or creative manner | Analyzes how the state of the current markets influences specific investment options that align to the client’s goals, including multiple markets, the state attractiveness, and relation to investment to the number of investment options | Shows progress toward proficiency, but with errors or omissions; areas for improvement may include details related to how the state of the current market influences investment options | Does not attempt criterion | 15 |
| Market Impacts | Exceeds proficiency in an exceptionally clear, insightful, sophisticated, or creative manner | Forecasts potential market impacts on portfolio recommendations, using the Portfolio Calculation Template, including future trends, historical data, and multi-time horizon framework | Shows progress toward proficiency, but with errors or omissions; areas for improvement may include details or calculations related to potential market impacts on portfolio recommendations | Does not attempt criterion | 10 |
| Asset Allocation Risk | Exceeds proficiency in an exceptionally clear, insightful, sophisticated, or creative manner | Measures the risk of different asset allocation strategies, using appropriate calculations in the Portfolio Calculation Template, including risk of individual investments to portfolio and risk of portfolio | Shows progress toward proficiency, but with errors or omissions; areas for improvement may include details or calculations related to the risk of asset allocation strategies | Does not attempt criterion | 20 |
| Risk Tolerance | Exceeds proficiency in an exceptionally clear, insightful, sophisticated, or creative manner | Compares asset allocation strategies and their risks with a client’s risk tolerance, including risk optimization, strategies for asset allocation, goal factors, and time horizon | Shows progress toward proficiency, but with errors or omissions; areas for improvement may include details related to asset allocation strategy risk and a client’s risk tolerance | Does not attempt criterion | 10 |
| Recommended Strategies | Exceeds proficiency in an exceptionally clear, insightful, sophisticated, or creative manner | Recommends an asset allocation strategy that best fits the client’s needs in the form of an investment policy statement, including viability, stability, tax-efficiency, level of risk and alignment with client’ risk tolerance, alignment with client’s goals, expected return and client’s needs, and withdrawal requirements | Shows progress toward proficiency, but with errors or omissions; areas for improvement may include details related to an asset allocation strategy that best fits the client’s needs | Does not attempt criterion | 10 |
| Articulation of Response | Exceeds proficiency in an exceptionally clear, insightful, sophisticated, or creative manner | Clearly conveys meaning with correct grammar, sentence structure, and spelling, demonstrating an understanding of audience and purpose | Shows progress toward proficiency, but with errors in grammar, sentence structure, and spelling, negatively impacting readability | Submission has critical errors in grammar, sentence structure, and spelling, preventing understanding of ideas | 5 |
| Citations and Attributions | Uses citations for ideas requiring attribution, with few or no minor errors | Uses citations for ideas requiring attribution, with consistent minor errors | Uses citations for ideas requiring attribution, with major errors | Does not use citations for ideas requiring attribution | 5 |
| Total: | 100% | ||||