Chapter 1

Question 1

In Canada, the primary legislation governing privacy issues.

Answer 1

Personal Information Protection and Electronic Documents Act (PIPEDA)

Question 2

The main purpose of this guideline, which was established in March 2012, was to provide greater transparency regarding the relationship between advisors and their clients and between advisors and their clients’ dealers.

Answer 2

Client Relationship Model 1 (CRM1)

Question 3

Requirements for this guideline include communicating in plain language, disclosing conflicts of interest, and taking greater care to assess suitability before making or accepting portfolio recommendations.

Answer 3

Client Relationship Model 1 (CRM1)

Question 4

The IIROC CRM Guidelines govern three main areas of client relationships:

Answer 4

1. Relationship disclosure
2. Enhanced suitability
3. Management and disclosure of conflicts of interest

Question 5

This guideline, that was implemented in 2017, was designed to increase investor protection and raise transparency standards.

Answer 5

Client Relationship Model 2 (CRM2)

Question 6

The guidelines also require additional information to be disclosed about all fees and charges associated with a purchase or sale of a security before the transaction takes place.

Answer 6

CRM2

Question 7

The most significant change in this guideline is the requirement to provide two new reports relating to client accounts: a fee statement and a performance report. Each of these reports must be provided to the clients once a year.

Answer 7

CRM2

Question 8

_____ _____ documents for mutual funds are designed to give investors information about a fund they are considering in a clear and easy-to-understand format.

Answer 8

Fund Facts

Question 9

Where once this document was delivered just after the purchase of a mutual fund, it must now be provided to the client prior to you accepting instructions to purchase the mutual fund.

Answer 9

Fund Facts

Question 10

The goal of the Canadian Securities Administrators

Answer 10

To protect Canadian investors and promote efficient capital markets.

Question 11

How does the wealth management process start?

Answer 11

With establishing a strong relationship with the client that is built on trust.

Question 12

What are the 4 steps of the wealth management process?

Answer 12

1. Understanding the client
2. Formulating the plan
3. Formalizing and implementing the plan
4. Reporting, reviewing, and rebalancing

Question 13

Outside professionals are often referred to as:

Answer 13

Centers of Influence (COIs)

Question 14

Integrated services consisting of private banking, investment counsel and personal trust services offered by the banks and other deposit-taking organizations.

Answer 14

private wealth management (PWM)

Question 15

These are online, automated, algorithm-based investment management services that are of particular concern to traditional advisors.

Answer 15

robo-advisors

Question 16

This body brings together securities regulators from all ten provinces and the three territories with the goal of developing a harmonized approach to securities regulation across Canada.

Answer 16

Canadian Securities Administrators (CSA)

Question 17

Mainly appealing to customers in the whole market is a significant small- and medium-size financial advice segment with almost four times the advisors serving the larger, integrated companies.

Answer 17

competition in mass market

Question 18

Most such firms are mono-line firms offering only investment management. Others have broadened their offering to include financial planning, along with trust and estate services.

Answer 18

private investment counsel (PIC)

Question 19

An advisor who helps clients in understanding major issues faced in later years. Each life passage has a financial consequence, so money discussions should closely relate to life meaning.

Answer 19

transition specialist

Question 20

It is the national self-regulatory organization that oversees mutual fund dealers in Canada. It is for the distribution side of the Canadian mutual fund industry.

Answer 20

Mutual Fund Dealers Association of Canada (MFDA)

Question 21

Refers to the rivalry that has increased, in response to demographic trends, between the three main channels - private wealth management, full service brokerage and private investment counsel.

Answer 21

competition between channels

Question 22

Such firms include the major banks and some other large financial institutions that offer a comprehensive range of private wealth services.

Answer 22

fully integrated firms

Question 23

Mutual funds have lowered their management expense ratios (MERs) to be more competitive. Lower MERs will lead to reduced compensation for advisors.

Answer 23

competitive pricing

Question 24

These firms offer a single set of services, such as discretionary management. This group includes most private investment counsel firms, family offices offering advice only, and other foreign banks.

Answer 24

mono-line firms

Question 25

Legislation enacted by the United States to reduce tax evasion by U.S. taxpayers holding financial accounts outside the country. It affects all foreign financial institutions globally.

Answer 25

Foreign Account Tax Compliance Act (FATCA)

U.S. is FAT

Question 26

This channel is dominated by the large, bank-owned dealers, which increasingly focus their product and service offering on the high net worth segment.

Answer 26

full service brokerage (FSB)

Question 27

A decentralized form of digital cash that eliminates the need for intermediaries such as banks and governments when making financial transactions.

Answer 27

cryptocurrencies

Question 28

These firms offer a limited range of high net worth services. It includes full-service brokerage and financial advisor firms, some foreign banks, and a few private investment counsel firms that provide financial planning or trust services.

Answer 28

semi-integrated firms

Question 29

In Quebec, the mutual fund industry is regulated by this body. There is an agreement between it and Mutual Fund Dealers Association of Canada intended to avoid regulatory duplication.

Answer 29

Autorité des marchés financiers (AMF)

Question 30

These companies help online investors create their own customized portfolios to save for specific goals. The investments typically used within robo-advisor portfolios are low-cost ETFs.

Answer 30

Fintech

Question 31

It provides greater transparency in the relationship between advisors and clients and between advisors and dealers.

Answer 31

client relationship model (CRM)

Question 32

________ and _______ are directly involved in regulating the activities of wealth advisors.

Answer 32

MFDA and IIROC

Question 33

Which generation has the highest number of people in the Canadian workforce?

Answer 33

Millennials

Question 34

A HNW client is a individual or family that owns at least __________ of investable assets. The term investable assets describes liquid assets only.

Answer 34

$1 million

Question 35

The federal government is responsible for the banking sector in Canada, however, these two bank activities, which are carried out by bank subsidiaries, are provincially regulated.

Answer 35

Trustee Services & Securities Dealing

Question 36

Educating the Client takes place during the what stage of the wealth management process?

Answer 36

The First Stage

Question 37

Rebalancing and Review would be which of the four steps of the wealth management process?

Answer 37

The Fourth Step