The return objective sounds like it should come first, and in the document it does, but building it correctly requires the goals-based work in the goals-based planning section of this module, because a defensible return objective is not a number a client wants; it is the number their stated goals actually require, checked against what is realistic given their constraints. State it as a range (a "return requirement" of, say, 6–7% real, derived from a goals-based funding calculation), never as a single point estimate a client can hold you to like a promise.
What is the difference between ability and willingness?
The risk objective is where private-client work earns its own vocabulary, and the central distinction is between ability to take risk and willingness to take risk, two different questions that a lazy adviser collapses into one "how do you feel about risk, on a scale of 1 to 10" questionnaire. Ability to take risk, which the institutional literature and the CFA curriculum call risk capacity, is objective and computable. Four things set it. Time horizon comes first: a 30-year-old accumulating for retirement has decades to recover from a drawdown, and a 68-year-old three years into retirement does not. Then the size and stability of income relative to the portfolio, since a tenured professional's ability to absorb a bad year is different from a commission-only salesperson's. Then the ratio of net worth to spending need. And, most easily missed, how much of the client's total capital is already market-risk-bearing through their human capital, which the human capital section computes. Willingness to take risk is subjective, self-reported and systematically distorted by exactly the biases M6.04 catalogs, which this module leans on rather than re-derives. A client's stated willingness swells with recency bias after a bull run and collapses with loss aversion after a drawdown. A willingness score taken at face value at the wrong moment in the cycle is not measuring temperament; it is measuring the market's last six months. The two disagree constantly, in both directions. A young client with stable income and modest spending has high ability and may still say "I can't stomach volatility". The more dangerous inverse is an aggressive-feeling client with low actual ability, because most of their net worth sits in an illiquid concentrated position and a downturn would be genuinely damaging. In either case the professional default is to let the more conservative of the two bind and to document the gap explicitly in the IPS. Closing that gap is then part of the plan, through education, through a smaller allocation than willingness alone would suggest, or through a phased approach, rather than a problem to paper over.
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{
"skill": "Drafting the narrative sections of a private-client IPS at speed",
"use": "Have a chat assistant turn a structured client interview (goals, time horizons, stated concerns, family situation) into a first-draft IPS narrative in the document's required structure, so you spend your time checking and sharpening the substance rather than fighting a blank page.",
"tools": ["Chat assistants - Claude, ChatGPT, Gemini", "Document-drafting tools inside a CRM/planning platform (e.g., a wealth-management suite's proposal generator)"],
"prompt": "Using only the facts I give you below, draft the Return Objective, Risk Objective, and five Constraints sections of a private-client IPS in this exact structure: [paste the section headers]. Do not invent any number, tax rule, or regulation I have not given you; where a figure or rule is needed and I have not supplied it, write '[NEEDS: <specific fact>]' instead of guessing.",
"verify": "Every tax rate, exemption threshold, account-type rule, or regulatory citation the draft contains beyond what you fed it is a fabrication risk (AI0.01's payoff line: plausible, not true) - trace each one to a named primary source (the Income Tax Department for India, the IRS/SEC for the US) before it survives into the client-facing document. This is Guardrail 1-5 in full, with #1 Trace and #4 Date-check doing the most work here, because tax rules are perishable by statute.",
"diy": "You must already be able to state the five-constraint structure and the ability-vs-willingness distinction from memory, unaided - that is what this section and the Applied Mini-Project certify. AI drafts sentences; it cannot decide what this specific client's liquidity need actually is.",
"market": "IN"
}