AWMA Exam 1 Questions with Correct
Answers
Which one of the following characteristics is more correct concerning younger wealthy
individuals (millennials and GenXers)?
A) Younger wealthy individuals are seeking more technological options in financial
planning.
B) Younger wealthy individuals have not experienced significant bear markets.
C) Younger wealthy individuals have directly opposite financial needs as compared to
baby boomers.
D) Younger wealthy individuals likely want to be advised by one of their own
generation.
A) Younger wealthy investors (millennials and GenXers) are seeking fresh approaches to
financial planning, including more technological options. In addition, young clients also have
been through fewer years of investing but have experienced several significant bear markets.
Mod 1
One of the most important life goals of wealthy individuals is
A) protecting wealth.
B) assuring their retirement lifestyle.
C) minimizing taxes.
D) travelling the world.
D) The most frequently stated life goals for wealthy individuals are having good health,
travelling the world, and achieving financial success. To achieve financial success, the most
,common financial goals are protecting wealth, assuring retirement lifestyle, minimizing
taxes, and leaving an estate to their heirs. Mod 1
One of the most important financial goals of wealthy individuals is
A)leaving an estate to their heirs.
B)having good health.
C)none of these.
D)travelling the world.
A) To achieve financial success, the most common financial goals are protecting wealth,
assuring retirement lifestyle, minimizing taxes, and leaving an estate to their heirs. The most
frequently stated life goals for wealthy individuals are having good health, travelling the
world, and achieving financial success. Mod 1
Which one of the following statements is true regarding sustainable and responsible
investments (SRIs)?
A) Shareholder activism is a part of SRIs.
B) Baby boomers are the most likely demographic to invest in SRIs.
C) SRIs provide lower returns, but are a "feel-good" option for investors.
D) SRIs provide only a negative filter of staying away from certain assets.
A) Shareholder activism also plays a part in getting companies to listen by passing
shareholder resolutions. Sustainable and responsible investing has been found to be of
importance to Gen Xers and millennials. Several studies have now shown taking into account
ESG factors actually increases long-term returns. For SRI investments, the adviser needs to
set up a series of filters to determine a client's specific wants for a sustainable fund. For
,instance, tobacco may be a main prohibition for one client, while religious aspects may be a
positive filter for that same or another client. Mod 1
Concerning control of assets in a private foundation versus a donor-advised fund, which
one of the following aspects is true for a donor-advised fund?
A)Remains with founder's values
B) Needs lengthy IRS approval
C) Easier and less expensive to launch
D) Must pay out a certain percentage each year
C) Donor-advised funds (DAFs) are growing in popularity and have the advantage of being
easier and cheaper to launch and not requiring the lengthy IRS approval that private
foundations need. Values may change with a DAF, as major contributors have input into this
type of charitable fund. In addition, only private foundations must make payouts each year;
DAFs have flexibility with this. Mod 1
If a high net worth (HNW) business owner came to your office, what would you expect
her financials to show, as compared to a HNW non-business owner?
A) About the same income, with more assets and higher net worth
B) About the same income with more assets, yet lower net worth
C) Higher income, with fewer assets and lower net worth
D) Lower income, with fewer assets and lower net worth
A) Income is similar between all HNW professions; however, assets and net worth include
business assets, so more assets and higher net worth are common for HNW business owners.
, Many business owners are exposed to a large amount of unsystematic risk because a
significant amount of their capital is often tied up in their business. Mod 1
When considering the social impact goals of a high net worth client, wealth planners
should expect those clients to
A)not want their planner to be involved in the charitable concern.
B)want their children to also develop charitable tendencies.
C) only want the charitable concern in order to reduce tax exposure.
D) overwhelmingly donate assets and not volunteer their time.
B) The reasons high net worth individuals make charitable donations are largely humanitarian
in nature—only half of these individuals donate to reduce tax exposure as a secondary
concern. It is important for advisers to be aware of and research any social impact their
clients find important. In addition, the preferred methods of accomplishing social impact in
the U.S., as compared to worldwide, are more religious and also include more aspects that are
nonfinancial, such as volunteerism. Mod 1
As compared to younger high net worth individuals, older wealthy individuals describe
their financial needs as more geared toward
A)managing cash and credit.
B) digital meetings.
C)investing outside of equities.
D) obtaining and using credit.
Answers
Which one of the following characteristics is more correct concerning younger wealthy
individuals (millennials and GenXers)?
A) Younger wealthy individuals are seeking more technological options in financial
planning.
B) Younger wealthy individuals have not experienced significant bear markets.
C) Younger wealthy individuals have directly opposite financial needs as compared to
baby boomers.
D) Younger wealthy individuals likely want to be advised by one of their own
generation.
A) Younger wealthy investors (millennials and GenXers) are seeking fresh approaches to
financial planning, including more technological options. In addition, young clients also have
been through fewer years of investing but have experienced several significant bear markets.
Mod 1
One of the most important life goals of wealthy individuals is
A) protecting wealth.
B) assuring their retirement lifestyle.
C) minimizing taxes.
D) travelling the world.
D) The most frequently stated life goals for wealthy individuals are having good health,
travelling the world, and achieving financial success. To achieve financial success, the most
,common financial goals are protecting wealth, assuring retirement lifestyle, minimizing
taxes, and leaving an estate to their heirs. Mod 1
One of the most important financial goals of wealthy individuals is
A)leaving an estate to their heirs.
B)having good health.
C)none of these.
D)travelling the world.
A) To achieve financial success, the most common financial goals are protecting wealth,
assuring retirement lifestyle, minimizing taxes, and leaving an estate to their heirs. The most
frequently stated life goals for wealthy individuals are having good health, travelling the
world, and achieving financial success. Mod 1
Which one of the following statements is true regarding sustainable and responsible
investments (SRIs)?
A) Shareholder activism is a part of SRIs.
B) Baby boomers are the most likely demographic to invest in SRIs.
C) SRIs provide lower returns, but are a "feel-good" option for investors.
D) SRIs provide only a negative filter of staying away from certain assets.
A) Shareholder activism also plays a part in getting companies to listen by passing
shareholder resolutions. Sustainable and responsible investing has been found to be of
importance to Gen Xers and millennials. Several studies have now shown taking into account
ESG factors actually increases long-term returns. For SRI investments, the adviser needs to
set up a series of filters to determine a client's specific wants for a sustainable fund. For
,instance, tobacco may be a main prohibition for one client, while religious aspects may be a
positive filter for that same or another client. Mod 1
Concerning control of assets in a private foundation versus a donor-advised fund, which
one of the following aspects is true for a donor-advised fund?
A)Remains with founder's values
B) Needs lengthy IRS approval
C) Easier and less expensive to launch
D) Must pay out a certain percentage each year
C) Donor-advised funds (DAFs) are growing in popularity and have the advantage of being
easier and cheaper to launch and not requiring the lengthy IRS approval that private
foundations need. Values may change with a DAF, as major contributors have input into this
type of charitable fund. In addition, only private foundations must make payouts each year;
DAFs have flexibility with this. Mod 1
If a high net worth (HNW) business owner came to your office, what would you expect
her financials to show, as compared to a HNW non-business owner?
A) About the same income, with more assets and higher net worth
B) About the same income with more assets, yet lower net worth
C) Higher income, with fewer assets and lower net worth
D) Lower income, with fewer assets and lower net worth
A) Income is similar between all HNW professions; however, assets and net worth include
business assets, so more assets and higher net worth are common for HNW business owners.
, Many business owners are exposed to a large amount of unsystematic risk because a
significant amount of their capital is often tied up in their business. Mod 1
When considering the social impact goals of a high net worth client, wealth planners
should expect those clients to
A)not want their planner to be involved in the charitable concern.
B)want their children to also develop charitable tendencies.
C) only want the charitable concern in order to reduce tax exposure.
D) overwhelmingly donate assets and not volunteer their time.
B) The reasons high net worth individuals make charitable donations are largely humanitarian
in nature—only half of these individuals donate to reduce tax exposure as a secondary
concern. It is important for advisers to be aware of and research any social impact their
clients find important. In addition, the preferred methods of accomplishing social impact in
the U.S., as compared to worldwide, are more religious and also include more aspects that are
nonfinancial, such as volunteerism. Mod 1
As compared to younger high net worth individuals, older wealthy individuals describe
their financial needs as more geared toward
A)managing cash and credit.
B) digital meetings.
C)investing outside of equities.
D) obtaining and using credit.
