An IPS turns intentions into a contract with yourself or with a client. Typical contents: return objective, risk tolerance expressed as a tolerable max-drawdown, the strategic weights, permitted ranges, the rebalancing trigger, liquidity needs, and a prohibited list such as unhedged single-name leverage.
Its value shows up in bad months. A statement that says equities may range from 50% to 70% and will be rebalanced at the bounds converts a frightening decision into a mechanical one. Without it, the decision is made under stress with no reference point.
For anyone managing outside capital, the IPS is also the document a regulator or investor will ask for. Date it, record every amendment, and never amend it during a drawdown for the sole purpose of avoiding a rebalance. See performance-reporting.
Related: strategic-asset-allocation, rebalancing-bands, trading-plan, max-drawdown