When drafting an Investment Policy Statement (IPS) for a Canadian client, which of the following elements, as per industry best practices and regulatory guidance like NI 31-103, must be explicitly included regarding investment objectives?

Question: When drafting an Investment Policy Statement (IPS) for a Canadian client, which of the following elements, as per industry best practices and regulatory guidance like NI 31-103, must be explicitly included regarding investment objectives?

Answer options:

• A detailed list of specific security selections and their historical performance. ✅ The client's specific return expectations, risk tolerance, and liquidity needs.
• A projection of future market conditions and interest rate movements.
• A guarantee of minimum portfolio returns over a specified period.

Correct answer: The client's specific return expectations, risk tolerance, and liquidity needs.

Explanation: An IPS explicitly details investment objectives, including the client's return expectations, risk tolerance, and liquidity constraints, which are fundamental to aligning the portfolio with client needs and regulatory requirements.