AWMA COMPREHENSIVE EXAM
QUESTIONS AND CORRECT ANSWERS
STUDY GUIDE
●● 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.
Answer: 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.
,Answer: 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.
Answer: 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
Answer: 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
Answer: 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.
Answer: 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.
QUESTIONS AND CORRECT ANSWERS
STUDY GUIDE
●● 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.
Answer: 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.
,Answer: 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.
Answer: 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
Answer: 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
Answer: 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.
Answer: 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.
