AIF TRAINING CERTIFICATION SCRIPT
2026 QUESTIONS WITH SOLUTIONS
GRADED A+
◍ In the event of litigation, factors a judge will consider when making a
determination of fiduciary status include all the following:.
Answer: 1. Number of implementation options2. Scope of services3.
Sophistication of client
◍ Standard of Care - Fiduciary.
Answer: 1-Principles and relationship based2-Undivided duty of loyalty to
client: • Avoid or manage conflicts • Greater transparency of
conflicts3-Duty of care of a prudent expert with utmost good faith: • Prudent
expert standard • Advice must be suitable and in clients best interests
◍ Standard of Care - Fair Dealing.
Answer: 1- Rules and transaction-based • Arms-length relationship2 -
Divided loyalty of agent between firm and customer: • Conflicts may exist
unmanaged and undisclosed3 - Deal fairly, consistent with industry
suitability standard: • Suitability standard rapidly evolving
◍ Define Fiduciary.
Answer: A fiduciary is someone who: manages property for the benefit of
another; exercises discretionary authority or control over assets; and/or acts
in a professional capacity of trust and renders comprehensive and
continuous investment advice. FYI - A custodian does not perform any of
these roles
◍ Global Fiduciary Standards of Excellence.
Answer: the investment process FI360 designed to ensure investment
decisions are prudently managed.
,◍ Investment Fiduciary.
Answer: someone who is managing the assets of another person and stands
in a special relationship of trust, confidence, and /or legal responsibility.
◍ What are the reasons to revisit service agreements at least every 3 years?.
Answer: 1. Vendor's product offering may have expanded2. Fees may be
reduced3. Scope of require services may have expandedThe is best practice,
not an ERISA (fiduciary) requirement
◍ What are the benefits of a CEFEX assessment?.
Answer: 1. It provides a "checklist" approach, which imparts a discipline
and rigor to an investment decision-making process2. It may help to educate
fiduciaries of their role and responsibilities3. It leads to the recognition and
correction of shortfalls to current investment practices, which may reduce
liability.Note: it is not designed as a fault-finding exercise
◍ An investment advisor must take discretion of the investment assets in order
to provide comprehensive and continuous investment advice. T or F.
Answer: False - An investment advisor need not take discretion in order to
provide comprehensive and continuous investment advice.
◍ Investment Stewards.
Answer: manage the overall investment decision-making process
◍ Who would normally be considered a fiduciary?.
Answer: 1. A professional providing comprehensive and continuous
advice2. Trustee of a private trust3. Someone with discretion to buy and sell
investable assets.Note: A stock broker/registered representative is not
considered a fiduciary
◍ Investment Advisors.
Answer: professionals who provide comprehensive and continuous advice to
Stewards.
◍ Investment Managers.
Answer: make securities transaction decisions and generally act with
, discretion.
◍ Regulatory Oversight is primarily provided by State Attorney General under
which pieces of legislation.
Answer: 1. UPIA2. UPMIFA3. UMPERSANote: Taft-Hartley plans are
governed by ERISA, which falls under the oversight responsibility of the
DOL, IRS and PBGC.
◍ How many investment Stewards?.
Answer: more than five million men and women, responsible for managing
more than 80% of the nation's liquid invested assets.
◍ Legislation underlying the Practices indicates that
U. S. Courts should have access to investment assets in the event there are
egregious violations of fiduciary responsibility. T or F.
Answer: True - Practice 1.6 reads, "Clients assets are protected from theft
and embezzlement." Because all of the Practices are substantiated by
legislation, you can infer that the statement is correct.
◍ A fiduciary or co-fiduciary cannot be held responsible for a breach of their
fiduciary responsibility if they can demonstrate they were not aware of a
particular duty or requirement. T or F.
Answer: F - Ignorance is not a viable defense.
◍ Examples of Stewards.
Answer: individuals who serve as: • trustees; • committee members for
endowments, foundations, and other institutional accounts; • plan sponsors;
or • who occupy similar positions entrusted with managing assets for others.
• stand at the top of the fiduciary pecking order.
◍ Expected returns are uncertain. Under the normal distribution curve,
approximately 95% of the expected returns fall within one standard
deviation of the mean. T or
F. .
Answer: False - Under the normal distribution curve, one standard deviation
encompasses 66% of the sample and two standard deviations encompass
, 95% of the sample. Thus , a portfolio with an expected return of 8% and
standard deviation of 17% could be expected to have a return of less than
-9% or more than 25% in approximately 3 years out of 9.
◍ How many Investment Advisors.
Answer: Approximately 317,000* investment advisors as of 2011
◍ The most widely used estimate of absolute risk is?.
Answer: Standard deviation - Alpha and the Sharpe Ratio are measures of
risk-adjusted return. Beta is a measure of market risk. Standard deviation is
the most widely accepted measure of absolute risk.
◍ All of the following are true of the policy portfolio EXCEPT:1. It relates to
asset allocation based upon efficient markets2. It should always be reflected
in the Investment Policy Statement (IPS)3. Ideally, it is used to model a
portfolio that will allow portfolio principal and returns to meet projected
liabilities.4. It is focused on Alpha.
Answer: 4. The policy portfolio is contrasted with the pricing portfolio. The
policy portfolio establishes the asset allocation that should be reflected in all
Investment Policy Statements. Ideally, a well crafter policy portfolio is
effective in meeting projected liabilities. The policy portfolio does not
address the possibility that managers can outperform on risk adjusted return
bases; therefore, Alpha is not considered in the policy portfolio. Risk, as
measured by Beta, is a focal point of the policy portfolio. Alpha is the focus
of the pricing portfolio.
◍ All of the following are decisive factors to consider when analyzing the
number of asset classes to include in a portfolio EXCEPT:1. Portfolio size2.
Investment expertise of decision-makers3. Existing brokerage platform
limitations4. Ability of decision-makers to properly monitor investments.
Answer: 3. All else being equal: the larger the portfolio size, the more asset
classes that should be available; the greater the investment expertise of the
decision makers, the more asset classes that should be available; and lastly,
the greater the ability to monitor the investments, the more assets classes
that should be available. Brokerage platform should not be a deciding factor
2026 QUESTIONS WITH SOLUTIONS
GRADED A+
◍ In the event of litigation, factors a judge will consider when making a
determination of fiduciary status include all the following:.
Answer: 1. Number of implementation options2. Scope of services3.
Sophistication of client
◍ Standard of Care - Fiduciary.
Answer: 1-Principles and relationship based2-Undivided duty of loyalty to
client: • Avoid or manage conflicts • Greater transparency of
conflicts3-Duty of care of a prudent expert with utmost good faith: • Prudent
expert standard • Advice must be suitable and in clients best interests
◍ Standard of Care - Fair Dealing.
Answer: 1- Rules and transaction-based • Arms-length relationship2 -
Divided loyalty of agent between firm and customer: • Conflicts may exist
unmanaged and undisclosed3 - Deal fairly, consistent with industry
suitability standard: • Suitability standard rapidly evolving
◍ Define Fiduciary.
Answer: A fiduciary is someone who: manages property for the benefit of
another; exercises discretionary authority or control over assets; and/or acts
in a professional capacity of trust and renders comprehensive and
continuous investment advice. FYI - A custodian does not perform any of
these roles
◍ Global Fiduciary Standards of Excellence.
Answer: the investment process FI360 designed to ensure investment
decisions are prudently managed.
,◍ Investment Fiduciary.
Answer: someone who is managing the assets of another person and stands
in a special relationship of trust, confidence, and /or legal responsibility.
◍ What are the reasons to revisit service agreements at least every 3 years?.
Answer: 1. Vendor's product offering may have expanded2. Fees may be
reduced3. Scope of require services may have expandedThe is best practice,
not an ERISA (fiduciary) requirement
◍ What are the benefits of a CEFEX assessment?.
Answer: 1. It provides a "checklist" approach, which imparts a discipline
and rigor to an investment decision-making process2. It may help to educate
fiduciaries of their role and responsibilities3. It leads to the recognition and
correction of shortfalls to current investment practices, which may reduce
liability.Note: it is not designed as a fault-finding exercise
◍ An investment advisor must take discretion of the investment assets in order
to provide comprehensive and continuous investment advice. T or F.
Answer: False - An investment advisor need not take discretion in order to
provide comprehensive and continuous investment advice.
◍ Investment Stewards.
Answer: manage the overall investment decision-making process
◍ Who would normally be considered a fiduciary?.
Answer: 1. A professional providing comprehensive and continuous
advice2. Trustee of a private trust3. Someone with discretion to buy and sell
investable assets.Note: A stock broker/registered representative is not
considered a fiduciary
◍ Investment Advisors.
Answer: professionals who provide comprehensive and continuous advice to
Stewards.
◍ Investment Managers.
Answer: make securities transaction decisions and generally act with
, discretion.
◍ Regulatory Oversight is primarily provided by State Attorney General under
which pieces of legislation.
Answer: 1. UPIA2. UPMIFA3. UMPERSANote: Taft-Hartley plans are
governed by ERISA, which falls under the oversight responsibility of the
DOL, IRS and PBGC.
◍ How many investment Stewards?.
Answer: more than five million men and women, responsible for managing
more than 80% of the nation's liquid invested assets.
◍ Legislation underlying the Practices indicates that
U. S. Courts should have access to investment assets in the event there are
egregious violations of fiduciary responsibility. T or F.
Answer: True - Practice 1.6 reads, "Clients assets are protected from theft
and embezzlement." Because all of the Practices are substantiated by
legislation, you can infer that the statement is correct.
◍ A fiduciary or co-fiduciary cannot be held responsible for a breach of their
fiduciary responsibility if they can demonstrate they were not aware of a
particular duty or requirement. T or F.
Answer: F - Ignorance is not a viable defense.
◍ Examples of Stewards.
Answer: individuals who serve as: • trustees; • committee members for
endowments, foundations, and other institutional accounts; • plan sponsors;
or • who occupy similar positions entrusted with managing assets for others.
• stand at the top of the fiduciary pecking order.
◍ Expected returns are uncertain. Under the normal distribution curve,
approximately 95% of the expected returns fall within one standard
deviation of the mean. T or
F. .
Answer: False - Under the normal distribution curve, one standard deviation
encompasses 66% of the sample and two standard deviations encompass
, 95% of the sample. Thus , a portfolio with an expected return of 8% and
standard deviation of 17% could be expected to have a return of less than
-9% or more than 25% in approximately 3 years out of 9.
◍ How many Investment Advisors.
Answer: Approximately 317,000* investment advisors as of 2011
◍ The most widely used estimate of absolute risk is?.
Answer: Standard deviation - Alpha and the Sharpe Ratio are measures of
risk-adjusted return. Beta is a measure of market risk. Standard deviation is
the most widely accepted measure of absolute risk.
◍ All of the following are true of the policy portfolio EXCEPT:1. It relates to
asset allocation based upon efficient markets2. It should always be reflected
in the Investment Policy Statement (IPS)3. Ideally, it is used to model a
portfolio that will allow portfolio principal and returns to meet projected
liabilities.4. It is focused on Alpha.
Answer: 4. The policy portfolio is contrasted with the pricing portfolio. The
policy portfolio establishes the asset allocation that should be reflected in all
Investment Policy Statements. Ideally, a well crafter policy portfolio is
effective in meeting projected liabilities. The policy portfolio does not
address the possibility that managers can outperform on risk adjusted return
bases; therefore, Alpha is not considered in the policy portfolio. Risk, as
measured by Beta, is a focal point of the policy portfolio. Alpha is the focus
of the pricing portfolio.
◍ All of the following are decisive factors to consider when analyzing the
number of asset classes to include in a portfolio EXCEPT:1. Portfolio size2.
Investment expertise of decision-makers3. Existing brokerage platform
limitations4. Ability of decision-makers to properly monitor investments.
Answer: 3. All else being equal: the larger the portfolio size, the more asset
classes that should be available; the greater the investment expertise of the
decision makers, the more asset classes that should be available; and lastly,
the greater the ability to monitor the investments, the more assets classes
that should be available. Brokerage platform should not be a deciding factor
