Preview Questions Wealth Manager | Role Specific Skill

Question 1: In advising clients on ESG investing (Environmental, Social, and Governance), what is the primary consideration for a wealth manager?

Which action should you take?

Choose only one option

Advising clients to invest exclusively in companies with high ESG ratings, regardless of financial returns

Ensuring that ESG factors align with the client's values and investment goals, while considering potential returns

Recommending ESG investments solely based on their recent performance without evaluating client goals

Ignoring ESG factors and focusing purely on financial returns

Question 2: How can tax loss harvesting be used effectively in estate planning?

Which action should you take?

Choose only one option

By minimizing inheritance taxes by shifting assets to tax-exempt vehicles

By reducing capital gains tax exposure through systematic sale of losing investments

By using capital losses to offset income taxes on heirs' future income

By increasing the tax basis of inherited assets to reduce future taxes

Question 3: In a diversified portfolio, which of the following asset classes would most likely help to hedge against inflation risk?

Which action should you take?

Choose only one option

Long-term government bonds with fixed interest rates

Real estate investment trusts (REITs)

Corporate bonds with fixed interest rates

Treasury inflation-protected securities (TIPS)

Question 4: What is the best approach for rebalancing a client's portfolio that has deviated significantly from its target allocation due to market movements?

Which action should you take?

Choose only one option

Rebalance only if the client requests it

Increase exposure to the underrepresented asset classes

Wait until the next quarterly review to make adjustments

Rebalance immediately to realign the portfolio

Question 5: What is the most effective way to mitigate the risk of market volatility for a diversified portfolio?

Which action should you take?

Choose only one option

Overweight the portfolio in bonds to reduce exposure to equities

Maintain a fixed allocation to each asset class regardless of market conditions

Use derivative instruments to hedge market risk

Focus on long-term holdings and ignore short-term market fluctuations

Question 6: How would you advise a client to structure their investments to minimize capital gains taxes in a bull market?

Which action should you take?

Choose only one option

Sell assets at long-term capital gains rates

Use margin accounts to leverage investments

Shift to dividend-producing stocks to qualify for favorable tax treatment

Focus on tax-deferred investments like retirement accounts