AIF Overview || with Perfect Answers.
Standard of Care - Fiduciary correct answers 1-Principles and relationship based
2-Undivided duty of loyalty to client:
• Avoid or manage conflicts
• Greater transparency of conflicts
3-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 correct answers 1- Rules and transaction-based
• Arms-length relationship
2 - Divided loyalty of agent between firm and customer:
• Conflicts may exist unmanaged and undisclosed
3 - Deal fairly, consistent with industry suitability standard:
• Suitability standard rapidly evolving
Global Fiduciary Standards of Excellence correct answers the investment process FI360
designed to ensure investment decisions are prudently managed.
Investment Fiduciary correct answers someone who is managing the assets of another person and
stands in a special relationship of trust, confidence, and /or legal responsibility.
Investment Stewards correct answers manage the overall investment decision-making process
Investment Advisors correct answers professionals who provide comprehensive and continuous
advice to Stewards.
Investment Managers correct answers make securities transaction decisions and generally act
with discretion.
How many investment Stewards? correct answers more than five million men and women,
responsible for managing more than 80% of the nation's liquid invested assets.
Examples of Stewards correct answers 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.
How many Investment Advisors correct answers Approximately 317,000* investment advisors
as of 2011
, Examples of Investment Advisors correct answers - wealth managers
- financial advisors
- trust officers
- financial consultants
- investment consultants
- financial planners
Defining characteristic of Investment Advisors correct answers Prudent Experts who give
comprehensive and continuous advice
How many Investment Managers correct answers There are more than 16,400 investment
companies in the U.S employing
Examples of Investment Managers correct answers - mutual fund managers
- exchange traded fund (ETFs) managers
- separately managed accounts managers
Defining characteristic of Investment Manager correct answers Prudent experts who exercise
discretion
What Fiduciary duty do Stewards and Advisors have? correct answers Stewards and Advisors
have a fiduciary duty to demonstrate that the
Investment Managers they use have been prudently selected and are monitored on an ongoing
basis.
What are Investment Stewards, Advisors, and Managers practices based on? correct answers
Steward & Advisor practices are grounded in legislation, case law, and regulatory opinion letters
Investment Manager practices are principle-driven
T or F: Investment advisors and registered representatives (brokers) are both held to a fiduciary
standard of care when dealing with their client. correct answers False:
Investment advisors are held to a fiduciary standard of care with their client while brokers are
held to a suitability standard. The advisor must always put the client's interest first; this involves
a singular duty of loyalty to the investor. Brokers operating under the suitability standard may
have divided loyalties. They are obligated to offer investments that are deemed "suitable" for the
investor even if perhaps not in the investor's best interest. The broker also has a duty of loyalty to
the broker-dealer firm the broker represents.
T or F: The fiduciary responsibility of trusts and foundations are primarily framed by Federal
legislation. correct answers False:
The fiduciary responsibilities of trusts and foundations are primarily framed by state legislation.
In most cases UPIA applies to trusts and UPMIFA (or UMIFA) applies to foundations.
Standard of Care - Fiduciary correct answers 1-Principles and relationship based
2-Undivided duty of loyalty to client:
• Avoid or manage conflicts
• Greater transparency of conflicts
3-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 correct answers 1- Rules and transaction-based
• Arms-length relationship
2 - Divided loyalty of agent between firm and customer:
• Conflicts may exist unmanaged and undisclosed
3 - Deal fairly, consistent with industry suitability standard:
• Suitability standard rapidly evolving
Global Fiduciary Standards of Excellence correct answers the investment process FI360
designed to ensure investment decisions are prudently managed.
Investment Fiduciary correct answers someone who is managing the assets of another person and
stands in a special relationship of trust, confidence, and /or legal responsibility.
Investment Stewards correct answers manage the overall investment decision-making process
Investment Advisors correct answers professionals who provide comprehensive and continuous
advice to Stewards.
Investment Managers correct answers make securities transaction decisions and generally act
with discretion.
How many investment Stewards? correct answers more than five million men and women,
responsible for managing more than 80% of the nation's liquid invested assets.
Examples of Stewards correct answers 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.
How many Investment Advisors correct answers Approximately 317,000* investment advisors
as of 2011
, Examples of Investment Advisors correct answers - wealth managers
- financial advisors
- trust officers
- financial consultants
- investment consultants
- financial planners
Defining characteristic of Investment Advisors correct answers Prudent Experts who give
comprehensive and continuous advice
How many Investment Managers correct answers There are more than 16,400 investment
companies in the U.S employing
Examples of Investment Managers correct answers - mutual fund managers
- exchange traded fund (ETFs) managers
- separately managed accounts managers
Defining characteristic of Investment Manager correct answers Prudent experts who exercise
discretion
What Fiduciary duty do Stewards and Advisors have? correct answers Stewards and Advisors
have a fiduciary duty to demonstrate that the
Investment Managers they use have been prudently selected and are monitored on an ongoing
basis.
What are Investment Stewards, Advisors, and Managers practices based on? correct answers
Steward & Advisor practices are grounded in legislation, case law, and regulatory opinion letters
Investment Manager practices are principle-driven
T or F: Investment advisors and registered representatives (brokers) are both held to a fiduciary
standard of care when dealing with their client. correct answers False:
Investment advisors are held to a fiduciary standard of care with their client while brokers are
held to a suitability standard. The advisor must always put the client's interest first; this involves
a singular duty of loyalty to the investor. Brokers operating under the suitability standard may
have divided loyalties. They are obligated to offer investments that are deemed "suitable" for the
investor even if perhaps not in the investor's best interest. The broker also has a duty of loyalty to
the broker-dealer firm the broker represents.
T or F: The fiduciary responsibility of trusts and foundations are primarily framed by Federal
legislation. correct answers False:
The fiduciary responsibilities of trusts and foundations are primarily framed by state legislation.
In most cases UPIA applies to trusts and UPMIFA (or UMIFA) applies to foundations.
