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2020-WME > Ch 1-4 > Flashcards

Ch 1-4 Flashcards

1
Q

Define Eminent Domain

A

Governments right to Take possession WHETHER YOU WANT OR NOT - pay fair compensation

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2
Q

Explain STANDARD of DEVIATION

A

Fluctuation around a central tendency (return) - measure of risk - high SD = MORE RISK - lower SD = LESS RUSK

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3
Q

Mnemonic for HNW occupational groups

A

HNW get to BE Retirees SINCE BE- senior BUSINESS EXECUTIVES RETIREES S- prof SERVICE providers I- INHERITING N- wealthy NEW immigrants C- CELEBRITIES E- ENTREPRENEURS

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4
Q

Define: Wealth Management

A

Assisting clients in the - accumulation - preservation - and transfer of wealth - throughout the life cycle

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5
Q

HNW - 3 main business models OR Delivery channels are?

A

PWN - private wealth management - fully integrated - deposit taking - NO INSURANCE features - offered through banks other subsidiaries FSB - full service brokerage - in-house referrals to complimentary professionals - moving to fee-based PIC - private investment counsel/ mono-line - discretionary investment management Includes: - small N4P

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6
Q

3 trends shaping wealth management

A
  • changing demographics (aging clients) - increased competition - technology
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7
Q

Between what years are these groups born? - millennials - baby boomers

A

Millennials- 1981 - 2000 Baby Boomers- 1946 - 1965

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8
Q

FATCA stands for ?

A

Mnemonic- Fat Cats Foreign Account Tax Compliance Act - for US tax payers

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9
Q

FATCA stands for ?

A

Mnemonic- Fat Cats Foreign Account Tax Compliance Act - for US tax payers

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10
Q

PIPEDA stands for?

A

personal Information Protection and Electronic Documents Act

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11
Q

KYC stands for? Mnemonic for MIN INFO required to open an account? AND judge SUITABILITY.

A

Know Your Client A- age D- dependants M- marital status O- occupation N- net worth I- income T- time horizon O- objective R- risk tolerance K- knowledge

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12
Q

PCMLTFA stands for?

A

Proceeds of Crime Money-Laundering and Terrorist Financing Act

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13
Q

CRM 1 focused on what

A

Client Relationship Model C- conflict of interest manage/disclosure R- relationship disclosure M- model/enhanced suitability

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14
Q

CRM 2 - 2 reports required annually - Fund Facts BEFORE sale

A

1- Fee Statement 2- Performance Report

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15
Q

ET Annual Fee Statement must include:

A
  • all commission and charges - all 3rd party revenue/compensation
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16
Q

ET Annual Performance Report must:

A
  • calculations must use prescribed methodological - ensure comparability Provide historical performance for the - current year and also the 3, 5, 10yr periods
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17
Q

9 Competencies of Successful Wealth Advisor

A

5 TECHNICAL 1) growing, protecting, monetizing of closely held business 2) tax-efficient strategies 3) advanced risk management 4) convert assets into income generating streams 5) implement wealth transfer plan 4 PROFESSIONAL 1) client relationships 2) evaluate needs and link to plan 3) co-ordinate experts when needed 4) custom marketing strategies

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18
Q

Wealth Management Process is:

A

1- Understanding client 2- formulating plan 3- formalize and implement plan 4- reporting, reviewing and rebalancing

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19
Q

Define MEANS values:

A
  • ACTIONS - what you NEED TO DO to reach goals
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20
Q

Define ENDS VALUES:

A

Where you see your life going. These influences HOW WE ACT TODAY to achieve our future goals

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21
Q

Define UNIFIED VALUE:

A

One’s MEANS values and ENDS values mutually reinforce each other

22
Q

Name 4 types of Right vs Right dilemmas

A
  • Individual vs Group (societal) - Short-term vs Long-term (goal-based) - Truth vs Loyalty (Integrity) - Justice vs Mercy (fairness)
23
Q

Name the 8 steps of the Ethical Decision-Making Process

A

1- is it a moral issue? 2- who’s - who makes the decision 3- gather facts 4- test for right vs wrong 5- test for right vs right 6- apply RESOLUTION PRINCIPLES 7- make decision and act 8- reflect

24
Q

Name 4 tests to determine if it’s a Right vs Wrong situation

A

1- Legal test 2- Smell test 3- Front-page test- reputation test 4- Mom test

25
Q

Name the 4 Right vs Right tests

A

1- Truth vs Loyalty 2- Individual vs Group 3- Short-term vs Long-term 4- Justice vs Mercy

26
Q

Name the 4 RESOLUTION PRINCIPLES

A

1- Ends-based: greatest good 2- Rule-based: rule 4 others to follow 3- Social Contract based: 😁relationships 4- Personalistic: authentic to me

27
Q

ET Define LAW OF AGENCY

A
  • gives advisor ability to enter trades on behalf of client WITHOUT Client having direct contact with person on the other side of the transaction
28
Q

ET State mnemonic for the min criteria used in SUITABILITY REVIEW

A

ADMONITOR K A- age D- # of dependants M- marital status O- occupation N- net worth I- income T- time horizon O- investment objectives R- risk tolerance K- knowledge & experience

29
Q

ET 3 Due Diligence COMPONENTs of KYC

A

1- Identity and Creditworthiness 2- Business Conduct 3- Suitability

30
Q

ET Name 4 REQUIREMENTS of KYC

A

IDENTITY and CREDITWORTHINESS 1) use due diligence to learn the essential facts related to all clients, accounts opened and every order processed on a clients behalf BUSINESS CONDUCT 2) each order accepted is within bounds of good business practice SUITABILITY 3) every order accepted from client suitable for client 4) ensure all trade recommendations suitable for client

31
Q

ET Name the 5 triggers for CRM (Client Relationship Model) review/ Suitability Review

A

1- trade accepted 2- recommendation made 3- securities received- transfer or deposited 4- change in account manager 5- material change to KYC info occurs

32
Q

Define NAAF and describe 4 types of info required

A

New Account Application Form 1) PERSONAL- contact info, birthday, spouse name, etc. 2) FINANCIAL- current fin pic, investment knowledge, etc. 3) INVESTMENT OBJECTIVES- AA percentages re: income vs cap gain (for each account) 4) RISK TOLERANCE- % low, med, high

33
Q

Name the 4 parts of the CLIENT DISCOVERY PROCESS

A
  • goals: needs and aspirations - current financial picture - objectives: required return and risk needed to achieve goals - investment constraints
34
Q

ET Describe difference between REQUIRED RETURN and RETURN OBJECTIVE

A

REQUIRED RETURN: - average return needed to meet client goals RETURN OBJECTIVE: average return portfolio expected to earn annually Defined 1 of 3 ways - inflation adjusted basis - after-tax basis - after-tax, inflation-adjusted basis MUST FIT WITH CLIENT RT LEVEL

35
Q

Define RISK TOLERANCE

A

Ability and Willingness to assume risk

36
Q

Define GOAL SHORTFALL

A

Probability/ risk of not meeting personal goals

37
Q

Define HOME BIAS

A
  • fear of foreign investments Result- miss out on international opportunities
38
Q

List 4 types of INVESTMENT CONSTRAINTS ? LUTT

A

1) Time Horizon 2) Liquidity Requirements: actual and potential 3) Tax Situation: MTR, RRSP room, pension adjustments, tax rate on other investment earnings 4) Unique Circumstances NOTE: low risk tolerance NOT a constraint RATHER an ‘objective’

39
Q

ET Describe difference between ASSET ALLOCATION vs ASSET LOCATION

A

ASSET ALLOCATION - % of portfolio held in different asset classes I.e. money market, fixed-income, equity ASSET LOCATION: - determining which investments in which type of account I.e. reg vs non-reg

40
Q

State NET WORTH formula and Subsection categories of Net Worth Statement

A

Assets - Liabilities = Net Worth ASSETS: liquid - investment - personal LIABILITIES: short-term (less than 1yr) and long-term (more than 1 yr)

41
Q

List 4 effective savings strategies

A

1) set realistic goals 2) set up automatic savings - allows for DCA 3) resist buying on credit 4) reward yourself

42
Q

What does OSFI stand for?

A

Office of the Superintendent of Financial Institutions

43
Q

ET Define MBS

A

Mortgage-backed Security - a pool or block of residential mortgages that have been securitized, or grouped together and sold to institutional or private investors.

44
Q

Define ESTOPPEL CERTIFICATE

A
  • document issued by condominium Corp giving info about specific condo unit and the condominium corporation
45
Q

Mnemonic: for the 6 strategies to manage credit

A

Credit DISCO 1) maintain CREDIT worthiness 2) pay-down or convert non-tax-DEDUCTIBLE debt 3) pay-down high INTEREST debt 4) SHORTEN repayment period on a loan 5) CONSOLIDATE debt 6) ensure benefits of debt OUTWEIGH costs

46
Q

Define REITS

A

Real Estate Investment Trusts - pool of commercial real estate and/or mortgages that have been Securitized, or grouped together and sold to investors - income is passed to investors ‘in-kind’ - more liquid than individual real estate

47
Q

3 techniques to improve cash flow For people with inadequate savings

A

1) expense reduction/debt restructuring 2) increase in income 3) enhanced investment return

48
Q

Describe/define GOALS vs OBJECTIVES

A

GOALS: life needs and wants OBJECTIVES: investment RETURN and RISK level they must tolerate to achieve those goals

49
Q

List 5 C’s of CREDIT

A

C- collateral R- repayment- capacity E-evaluation- credit history D- down-payment- capital I- integrity- character T- na

50
Q

Name the 5 elements of a fiduciary relationship.

A

1- Vulnerability: Age, language, invest knowledge, experience 2- Trust- 3- Reliance- ? Long history of taking advice 4- Discretion- ability to trade without client approval 5- Prof rules of Conduct

51
Q

How do I make undercards how do I make audio card

A
52
Q
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2020-WME (13 decks)

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