What largely determines the client's time horizon in an IPS?

The client's time horizon in an Investment Policy Statement (IPS) is primarily influenced by their financial goals and life events. This is because the time horizon encompasses the period over which the client expects to achieve specific financial objectives, such as saving for retirement, funding a child's education, or purchasing a home. Life events, such as marriage, the birth of a child, or nearing retirement age, also play a crucial role by affecting when these goals need to be realized.

Understanding the client's objectives and the timing associated with these goals allows for the development of an investment strategy that aligns with the client's readiness to tolerate market volatility over different timeframes. This specifically guides asset allocation decisions, liquidity needs, and risk tolerance, which are all integral to formulating an effective investment strategy.

In contrast, while investment product features, market interest rates, and investment monitoring practices are important considerations in the broader context of investment management, they do not directly dictate the client's time horizon. For instance, specific investment products may offer various features that could appeal to a client but do not inherently reveal when the client intends to achieve their financial goals. Similarly, market interest rates can influence investment decisions but are not determinant factors in defining the client's time horizon. Monitoring practices are crucial for tracking investment performance but