AWMA Exam 2 UPDATED ACTUAL
Questions and CORRECT Answers
Of the following practical dimensions of emotional intelligence, which is the most complex and
difficult to attain?
A)Regulation of adviser and/or client emotions
B)Integration of emotional intelligence into thinking
C)Perception and differentiation between emotions
D)Understanding and explanation of the emotions - CORRECT ANSWER - A)
Individuals who score highly on the main dimensions of EI are able to perceive and differentiate
between emotions, integrate this information into thinking, accurately understand and explain the
emotions, and regulate their own and other's emotions, all while anticipating and managing their
responses to other's emotional displays. The ability to perform well in one dimension is
dependent upon one's abilities in the other dimensions, with emotional perception being the least
complex and emotional regulation being the most complex. Mod 1
Warning signs of possible elder abuse of a client include
A)having solid powers of attorney.
B) having dementia.
C) sudden happiness with a new friend.
D) someone isolating the client from family and friends. - CORRECT ANSWER - D) A
planner should be savvy to the following warning signs of elder abuse: signs of dementia and/or
confusion with questionable or no powers of attorney granted; someone isolating the client from
family and friends; and irritability and/or depression. Dementia can be present without the client
being a victim of fraud; this still requires family or planner intervention. Mod 1
Which one of the following is most correct concerning high net worth client discussions about
finances with their children?
A) Most millennials express that the best time to introduce children to the financial adviser is
under age 12.
,B) About 60% of high net worth clients have not yet talked to their children about their wealth.
C) Most high net worth individuals do not plan to ever talk to their children about their wealth.
D) Most baby boomers say it does not matter when children are introduced to a financial adviser.
- CORRECT ANSWER - A) A Northern Trust survey found that 26% of wealthy
individuals have not yet talked to their children about wealth and some (not most) do not plan to
ever do so. A Spectrem study shows that 54% of millennials say that under age 12 is the best age
to introduce a financial planner. Considering the average of all demographic categories, and that
of baby boomers, the ages 18 to 25 group was found to be the ideal time to introduce a financial
adviser. Mod 1
Which one of the following is most important in establishing trust with a client?
A) Being associated with a good financial company
B)Having a pleasant manner
C)Demonstrating professional knowledge
D)Being genuine and following best practices - CORRECT ANSWER - D) Being genuine
and following best practices are two of the most important factors in establishing trust with a
client. Mod 1
Which one of the following is a question that a wealth adviser could best pose to clients when
starting a conversation about family matters?
A)Do you exclude family members from learning about or participating in decisions related to
the family's business or wealth?
B)Do you fight when the family communicates about wealth matters?
C)Are there any major transitions that are important?
D)What steps has the family taken to ensure that family members are financially fluent and well
positioned to serve as responsible stewards of wealth? - CORRECT ANSWER - D) When
starting a discourse with a wealthy client, the questions about family matters should be open-
ended and not leading clients to answer a certain way. Mod 1
Which one of the following is a regulation that allows members to put a temporary hold on
disbursements from an elder account if elder abuse is suspected?
,A)Elder Justice Initiative
B) FINRA Rule 4512
C) FINRA Rule 2165
D) Senior Safe Act - CORRECT ANSWER - C) FINRA Rule 2165 goes beyond the
Senior Safe Act in not only detecting financial abuse, but allowing an adviser to put a temporary
hold (up to 25 days) on disbursements from an elder account (over 65) if financial abuse is
suspected to be present or commencing. FINRA Rule 4512 requires financial advisers to make a
"reasonable effort" to collect the name of a "trusted contact person." The Elder Justice Initiative
supports and coordinates the Department of Justice's enforcement and programmatic efforts to
combat elder abuse, neglect, and financial fraud and scams. Mod 1
When the personal circumstances of a client change, to which wealth management step does the
investment professional return?
A)Data gathering and goal establishment
B)Analyzing and evaluating the client's financial status
C)Monitoring financial planning recommendations
D)Implementing financial planning recommendations - CORRECT ANSWER - A) In Step
2 of the wealth adviser financial planning process, advisers discover client goals and gather
financial data about the client. If there is a major event in the client's life, then planners should
come back to this goal-setting, data-gathering step. Mod 1
Compared to those planners working alone, advisers working with a team generally have
A)more assets under management but less revenue.
B)more assets under management and more revenue.
C) fewer assets under management but more revenue.
D)fewer assets under management and less revenue. - CORRECT ANSWER - B)
Teamwork is a bonus for advisers, who, when compared to sole practitioners, generally have
deeper client relationships, generate more assets and revenue, have lower attrition, and have a
higher fee-based ratio. Mod 1
, When working in a team at a financial institution, which one of the following is something an
adviser would likely not do?
A)Implement client recommendations
B)Refer problems to another team member
C)Collaborate with a customized team of specialists
D)Develop and retain lasting client relationships - CORRECT ANSWER - B) At a
financial institution, advisers may need to develop and retain lasting client relationships,
collaborate with a customized team of specialists, resolve problems, and implement client
recommendations. Mod 1
Some high net worth clients are generally very concerned about the economy, so advisers should
A)advise clients to ignore economic conditions.
B)be concerned that those clients are concentrating on short-term and not long-term goals.
C)refer those clients to an economic specialist.
D)change a client's investment policy statement based on current economic conditions. -
CORRECT ANSWER - B) High net worth investors are very concerned with the state of
the economy, which can make them want to change investments often. This puts an undue
emphasis on short-term goals, leaving behind the long-term goals established by their adviser.
However, the wealthy desire economic advice from their adviser, including advice on how they
will meet their goals under particular economic conditions. The investment policy statement can
keep a client focused on long-term goals and not short-term economic conditions. Mod 1
Gary would like to know the weighted beta coefficient for his portfolio. He owns 100 shares of
ACE common stock with a beta of 1.1 and total current market value of $5,000; 400 shares of
BDF common stock with a beta of .70 and total current market value of $8,000; and 200 shares
of GIK common stock with a beta of 1.5 and total current market value of $10,000.
What is the overall weighted beta coefficient for Gary's portfolio?
A)1.05
Questions and CORRECT Answers
Of the following practical dimensions of emotional intelligence, which is the most complex and
difficult to attain?
A)Regulation of adviser and/or client emotions
B)Integration of emotional intelligence into thinking
C)Perception and differentiation between emotions
D)Understanding and explanation of the emotions - CORRECT ANSWER - A)
Individuals who score highly on the main dimensions of EI are able to perceive and differentiate
between emotions, integrate this information into thinking, accurately understand and explain the
emotions, and regulate their own and other's emotions, all while anticipating and managing their
responses to other's emotional displays. The ability to perform well in one dimension is
dependent upon one's abilities in the other dimensions, with emotional perception being the least
complex and emotional regulation being the most complex. Mod 1
Warning signs of possible elder abuse of a client include
A)having solid powers of attorney.
B) having dementia.
C) sudden happiness with a new friend.
D) someone isolating the client from family and friends. - CORRECT ANSWER - D) A
planner should be savvy to the following warning signs of elder abuse: signs of dementia and/or
confusion with questionable or no powers of attorney granted; someone isolating the client from
family and friends; and irritability and/or depression. Dementia can be present without the client
being a victim of fraud; this still requires family or planner intervention. Mod 1
Which one of the following is most correct concerning high net worth client discussions about
finances with their children?
A) Most millennials express that the best time to introduce children to the financial adviser is
under age 12.
,B) About 60% of high net worth clients have not yet talked to their children about their wealth.
C) Most high net worth individuals do not plan to ever talk to their children about their wealth.
D) Most baby boomers say it does not matter when children are introduced to a financial adviser.
- CORRECT ANSWER - A) A Northern Trust survey found that 26% of wealthy
individuals have not yet talked to their children about wealth and some (not most) do not plan to
ever do so. A Spectrem study shows that 54% of millennials say that under age 12 is the best age
to introduce a financial planner. Considering the average of all demographic categories, and that
of baby boomers, the ages 18 to 25 group was found to be the ideal time to introduce a financial
adviser. Mod 1
Which one of the following is most important in establishing trust with a client?
A) Being associated with a good financial company
B)Having a pleasant manner
C)Demonstrating professional knowledge
D)Being genuine and following best practices - CORRECT ANSWER - D) Being genuine
and following best practices are two of the most important factors in establishing trust with a
client. Mod 1
Which one of the following is a question that a wealth adviser could best pose to clients when
starting a conversation about family matters?
A)Do you exclude family members from learning about or participating in decisions related to
the family's business or wealth?
B)Do you fight when the family communicates about wealth matters?
C)Are there any major transitions that are important?
D)What steps has the family taken to ensure that family members are financially fluent and well
positioned to serve as responsible stewards of wealth? - CORRECT ANSWER - D) When
starting a discourse with a wealthy client, the questions about family matters should be open-
ended and not leading clients to answer a certain way. Mod 1
Which one of the following is a regulation that allows members to put a temporary hold on
disbursements from an elder account if elder abuse is suspected?
,A)Elder Justice Initiative
B) FINRA Rule 4512
C) FINRA Rule 2165
D) Senior Safe Act - CORRECT ANSWER - C) FINRA Rule 2165 goes beyond the
Senior Safe Act in not only detecting financial abuse, but allowing an adviser to put a temporary
hold (up to 25 days) on disbursements from an elder account (over 65) if financial abuse is
suspected to be present or commencing. FINRA Rule 4512 requires financial advisers to make a
"reasonable effort" to collect the name of a "trusted contact person." The Elder Justice Initiative
supports and coordinates the Department of Justice's enforcement and programmatic efforts to
combat elder abuse, neglect, and financial fraud and scams. Mod 1
When the personal circumstances of a client change, to which wealth management step does the
investment professional return?
A)Data gathering and goal establishment
B)Analyzing and evaluating the client's financial status
C)Monitoring financial planning recommendations
D)Implementing financial planning recommendations - CORRECT ANSWER - A) In Step
2 of the wealth adviser financial planning process, advisers discover client goals and gather
financial data about the client. If there is a major event in the client's life, then planners should
come back to this goal-setting, data-gathering step. Mod 1
Compared to those planners working alone, advisers working with a team generally have
A)more assets under management but less revenue.
B)more assets under management and more revenue.
C) fewer assets under management but more revenue.
D)fewer assets under management and less revenue. - CORRECT ANSWER - B)
Teamwork is a bonus for advisers, who, when compared to sole practitioners, generally have
deeper client relationships, generate more assets and revenue, have lower attrition, and have a
higher fee-based ratio. Mod 1
, When working in a team at a financial institution, which one of the following is something an
adviser would likely not do?
A)Implement client recommendations
B)Refer problems to another team member
C)Collaborate with a customized team of specialists
D)Develop and retain lasting client relationships - CORRECT ANSWER - B) At a
financial institution, advisers may need to develop and retain lasting client relationships,
collaborate with a customized team of specialists, resolve problems, and implement client
recommendations. Mod 1
Some high net worth clients are generally very concerned about the economy, so advisers should
A)advise clients to ignore economic conditions.
B)be concerned that those clients are concentrating on short-term and not long-term goals.
C)refer those clients to an economic specialist.
D)change a client's investment policy statement based on current economic conditions. -
CORRECT ANSWER - B) High net worth investors are very concerned with the state of
the economy, which can make them want to change investments often. This puts an undue
emphasis on short-term goals, leaving behind the long-term goals established by their adviser.
However, the wealthy desire economic advice from their adviser, including advice on how they
will meet their goals under particular economic conditions. The investment policy statement can
keep a client focused on long-term goals and not short-term economic conditions. Mod 1
Gary would like to know the weighted beta coefficient for his portfolio. He owns 100 shares of
ACE common stock with a beta of 1.1 and total current market value of $5,000; 400 shares of
BDF common stock with a beta of .70 and total current market value of $8,000; and 200 shares
of GIK common stock with a beta of 1.5 and total current market value of $10,000.
What is the overall weighted beta coefficient for Gary's portfolio?
A)1.05
