[AAMS] Accredited Asset Management Specialist Practice Exam

1. The Asset Management Process

Defining the Relationship: Establishing and defining the client-planner relationship.

Data Gathering: Gathering client data, including goals, expectations, and risk tolerance.

Analyzing Financial Status: Analyzing and evaluating the client’s current financial status.

Developing Recommendations: Creating and presenting asset management recommendations.

Implementation & Monitoring: Implementing the recommendations and monitoring the portfolio for necessary adjustments.

2. Risk, Return, and Investment Performance

Types of Risk: Systematic (market) vs. Unsystematic (business, financial) risks.

Risk Measurement: Understanding Standard Deviation, Beta, and Variance.

Return Measures: Calculating Arithmetic vs. Geometric returns, Yield to Maturity (YTM), and Total Return.

Performance Evaluation: Utilizing the Sharpe Ratio, Treynor Ratio, and Jensen’s Alpha to evaluate risk-adjusted performance.

3. Asset Allocation and Selection

Modern Portfolio Theory (MPT): Efficient Frontier, Capital Asset Pricing Model (CAPM), and the Security Market Line (SML).

Allocation Strategies: Strategic vs. Tactical asset allocation and the role of rebalancing.

Security Types: Characteristics of common stocks, preferred stocks, and various corporate/government bonds.

Investment Vehicles: Deep dive into Mutual Funds, Exchange-Traded Funds (ETFs), and Unit Investment Trusts (UITs).

4. Investment Strategies

Active vs. Passive: Comparing index-tracking strategies with active management.

Equity Strategies: Growth vs. Value investing, Small-cap vs. Large-cap, and Sector rotation.

Fixed-Income Strategies: Laddering, Barbells, and Bullet strategies for bond portfolios.

Alternative Investments: Introduction to Real Estate, Hedge Funds, and Commodities.

5. Taxation of Investments

Cost Basis: Determining basis for various assets and the impact of corporate actions (splits, dividends).

Capital Gains/Losses: Tax treatment of short-term vs. long-term gains and the "Wash Sale" rule.

Tax-Efficient Investing: Strategies for minimizing tax drag, such as tax-loss harvesting and municipal bond usage.

Dividends and Interest: Understanding qualified vs. non-qualified dividends.

6. Investing for Retirement

Retirement Needs Analysis: Projecting future income needs and inflation adjustments.

Qualified Plans: Deep dive into 401(k), 403(b), and Profit-Sharing plans.

IRAs: Differences between Traditional, Roth, SEP, and SIMPLE IRAs.

Distribution Rules: Understanding Required Minimum Distributions (RMDs) and early withdrawal penalties.

7. Deferred Compensation and Other Benefit Plans

Non-Qualified Deferred Compensation (NQDC): Secular vs. Rabbi Trusts and tax implications for executives.

Stock Options: Incentive Stock Options (ISOs) vs. Non-Qualified Stock Options (NQSOs).

Employee Stock Purchase Plans (ESPP): Rules, tax treatment, and planning opportunities.

8. Insurance Products for Investment Clients

Life Insurance: Term, Whole Life, Universal Life, and Variable Life as investment/protection tools.

Annuities: Fixed, Variable, and Indexed annuities; understanding the accumulation and distribution phases.

Long-Term Care: Integrating LTC insurance into a comprehensive asset management plan.

9. Estate Planning for Investment Clients

The Probate Process: Understanding how assets transfer and which assets avoid probate.

Titling of Assets: Joint Tenancy, Tenants in Common, and Community Property.

Trusts: Revocable vs. Irrevocable trusts and their role in asset protection and tax reduction.

Gifting Strategies: Annual exclusions and the Unified Gift and Estate Tax Credit.

10. Fiduciary, Ethical, and Regulatory Issues

Regulatory Environment: The Investment Advisers Act of 1940 and the role of the SEC and FINRA.

Fiduciary Standard: Understanding the "Best Interest" standard vs. the "Suitability" standard.

CFFP Standards of Professional Conduct: Ethics, integrity, objectivity, and confidentiality requirements for AAMS designees.