Chapter 4 Flashcards
Name the 4 accumulation stages
- Seed money formation
- Mid-life growth stage
- Pre-retirement consolidation stage
- Retirement
The ____ stage occurs between ____ to ____ years. The objective is to accumulate sufficient ____ to create a base for future growth.
- Seed money formation stage
- 20 to 45
____ strategies attempt to match the performance of a benchmark asset mix.
____ is the most popular ____ strategy.
- Passive
- Indexing
____ strategies attempt to outperform a benchmark by over/under weighting certain market sectors.
Active
___ is used to describe all types of investments a client may have in a portfolio such as:
- stocks
- bonds
- debt
- managed products
- mutual funds
Security
Refers to the decision by a client and advisor to alter the benchmark asset mix to take advantage of perceived opportunities.
Tactical Asset Allocation (TAA)
An asset allocation strategy normally has 3 components. They are…
- Strategic asset allocation
- Tactical asset allocation
- Rebalancing
The annual return needed to meet the clients goal is called…
The return objective
Name the 6 key steps in the portfolio management process.
- Determine objectives/constraints
- Establish an asset allocation strategy
- Select securities.
- Monitor the client & market
- Evaluate portfolio performance
- Rebalance
This strategy will reduce the risk of emotional decision making during the early partofthe seed money formation stage. It gradually increases the equity mix.
Stepping asset allocation strategy.
The ___ years generally occur between 35 and 60. When clients reach this stage, they haves good idea of where they are going in their lives.
Mid-Life Growth
During the ___ stage most of he capital has need formed. This occurs between __ and __ years of age.
55 and 65.
