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C-4. Investment Planning
- d. evaluate the success of an investment program for a private client based on portfolio reporting and review
- b. discuss the tax efficiency of investment across various asset types and recommend various tax management strategies for asset allocation
- c. discuss and recommend appropriate wealth management planning approaches for retirement from legal, taxation, and jurisdictional perspectives
14. Investment Manager Selection
- f. discuss how behavioral factors affect investment team decision making, and recommend techniques for mitigating their effects
A-1. Index-Based Equity Strategies
- a. compare factor-based strategies to market-capitalization-weighted indexing
- b. compare different approaches to index-based equity strategies
- c. compare different approaches to index-based equity investing
- d. compare the full replication, stratified sampling, and optimization approaches for the construction of index-based equity portfolios
- e. discuss potential causes of tracking error and methods to control tracking error for index-based equity portfolios
- f. explain sources of return and risk to an index-based equity portfolio
B-1. Private Investments and Structures
- a. contrast the features of private and public investments, and discuss characteristics of private and public markets
- b. discuss private investment methods and structures and their uses
- c. discuss the difference between public and private market performance, and calculate, interpret, and discuss the use of performance metrics including distributed to paid-in, residual value to paid-in, and total value to paid-in
- d. compare the risk and return of investing in private markets and public markets as part of a strategic asset allocation
B-2. General Partner and Investor Perspectives and the Investment Process
- a. discuss a general partner’s roles and responsibilities in managing private investment funds
- b. discuss how private investment firms align their interests with those of their investors, and calculate, interpret, and discuss private market fund performance from an investor perspective, including management fees and carried interest
- c. discuss favorable characteristics of private investment targets and sources of value creation in private markets
- d. discuss the role of conducting due diligence and establishing a business plan in the private investment process
- e. discuss alternative exit routes in private investments and their impact on value
B-3. Private Equity
- a. discuss private equity strategies over the company life cycle
- b. discuss characteristics of venture capital and growth equity investments
- c. discuss characteristics of buyout equity investments
- d. estimate and interpret key inputs and calculate the value of a private equity investment for venture capital, growth equity, and buyout situations
- e. discuss the risk and return among private equity investments as well as versus other investments as part of a strategic asset allocation
B-4. Private Debt
- a. discuss the use of debt financing in private market strategies over the investment life cycle
- b. discuss the use of leveraged loans, high-yield bonds, and convertible bonds in private market strategies
- c. contrast the use of mezzanine debt and unitranche debt in private market strategies;
- d. analyze private debt profiles and calculate and interpret financial ratios used to value private debt investments
- e. discuss the risk and return among private debt investments as well as versus other private market investments as part of a strategic asset allocation
B-5. Private Special Situations
- a. discuss the characteristics and risks of special investment situations
- b. discuss the features of distressed debt, financing alternatives for issuers in financial distress, and investment strategies in distressed situations
- c. discuss the features of complex investment situations involving financial dislocation or stress
- d. discuss the due diligence and valuation processes used to evaluate special investment situations
- e. discuss the risk and return among special situations and compared to other forms of private debt as part of a strategic asset allocation
B-6. Private Real Estate Investments
- a. discuss important private real estate investment features
- b. discuss economic value drivers of private real estate investments and their role in a portfolio
- c. discuss the due diligence and valuation processes for private real estate
- d. discuss the distinctive investment characteristics of timberland and farmland
- e. discuss the risk and return among private real estate investments and as compared to other investments as part of a strategic asset allocation
B-7. Infrastructure
- a. discuss important infrastructure investment features
- b. discuss infrastructure investment methods and investment vehicles and their uses
- c. discuss the infrastructure investment process over the project life cycle and the roles of infrastructure debt and equity financing
- d. discuss the due diligence and valuation processes for infrastructure investments
- e. discuss the risk and return among infrastructure investments and as compared to other investments as part of a strategic asset allocation
C-1. The Private Wealth Management Industry
- a. discuss the typical business models of private wealth management service providers and their segment-based strategies
- b. discuss typical fee, revenue, and compensation structures prevalent in the private wealth management industry
- c. discuss how various advisers, consultants, and professionals support private wealth managers and their clients
- d. describe and evaluate regulatory and compliance considerations influencing the private wealth management industry
C-2. Working With the Wealthy
- a. describe how family and human dynamics relate to wealth and its management
- b. describe skills needed in profiling, acquiring, advising, communicating with, and educating private clients
- c. describe the unique characteristics of ultra-high-net-worth individuals and how these characteristics distinguish them from other private wealth management clients
- d. recommend appropriate approaches to the development, implementation, adherence, and amendment of a common, long-term framework for joint family decision making
C-3. Wealth Planning
- a. formulate goals-based financial plans and recommend appropriate strategies to achieve an individual’s goals-based financial plans
- b. recommend and justify methods to manage a family’s financial exposures holistically across their lifetime and retirement
- c. evaluate how the principles of taxation and taxes influence goals-based planning and holistic financial plans for individual investors
- d. recommend appropriate liquidity strategies for goal-based planning and holistic financial plans
C-5. Preserving the Wealth
- a. analyze the types of risks relevant to human capital
- b. describe and recommend strategies to manage risks to human capital
- c. recommend planning and investment strategies to mitigate the corrosive influence of inflation on preserving purchasing power
- d. describe how exchange rates influence asset allocation and planning as well as approaches to mitigate the exchange rate risk
C-6. Advising the Wealthy
- a. discuss and recommend appropriate citizenship, nationality, and legal residency approaches for private clients
- b. discuss and recommend appropriate private wealth management approaches that maximize the human capital, financial capital, and economic net worth of complex family situations
- c. discuss and recommend appropriate private wealth management approaches that maximize the human capital, financial capital, and economic net worth of entrepreneurs and business owners
- d. discuss and recommend appropriate private wealth management approaches that maximize the human capital, financial capital, and economic net worth of professionals, executives, and others
C-7. Transferring the Wealth
- a. discuss and recommend appropriate wealth management planning approaches for transferring wealth during the lifetime of the giver through gifts
- b. discuss and recommend appropriate wealth management planning approaches for transferring wealth at death through bequests and inheritance
- c. discuss and recommend appropriate wealth management planning approaches for the preservation of wealth across multiple generations through charitable giving and philanthropy
9. An Overview of Private Wealth Management
- a. discuss the different types of individual wealth and how wealth is created and distributed globally
- b. evaluate how Changes in human capital, financial capital, and economic net worth across the financial stages of an individual’s life influence their financial decision making
- c. justify how returns, risks, objectives, and constraints for individuals relate to their human and financial capital
- d. evaluate how various types of taxes imposed on individual investors and the impact of inflation influence investment decisions
- e. discuss the differences between private and institutional clients and formulate an appropriate Investment Policy Statement for private clients
11. Trading Costs and Electronic Markets
- a. explain the components of execution costs, including explicit and implicit costs
- b. calculate and interpret effective spreads and VWAP transaction cost estimates
- c. describe the implementation shortfall approach to transaction cost measurement
- d. describe factors driving the development of electronic trading systems
- e. describe market fragmentation
- f. identify and contrast the types of electronic traders
- g. describe characteristics and uses of electronic trading systems
- h. describe comparative advantages of low-latency traders
- i. describe the risks associated with electronic trading and how regulators mitigate them
- j. describe abusive trading practices that real-time surveillance of markets may detect
14. Passive Equity Investing
- b. compare passive factor-based strategies to market-capitalization-weighted indexing
- c. compare different approaches to passive equity investing
- d. compare the full replication, stratified sampling, and optimization approaches for the construction of passively managed equity portfolios
- e. discuss potential causes of tracking error and methods to control tracking error for passively managed equity portfolios
- f. explain sources of return and risk to a passively managed equity portfolio
17. Hedge Fund Strategies
- a. discuss how hedge fund strategies may be classified
- b. discuss investment characteristics, strategy implementation, and role in a portfolio of equity-related hedge fund strategies
- c. discuss investment characteristics, strategy implementation, and role in a portfolio of event-driven hedge fund strategies
- d. discuss investment characteristics, strategy implementation, and role in a portfolio of relative value hedge fund strategies
- e. discuss investment characteristics, strategy implementation, and role in a portfolio of opportunistic hedge fund strategies
- f. discuss investment characteristics, strategy implementation, and role in a portfolio of specialist hedge fund strategies
- g. discuss investment characteristics, strategy implementation, and role in a portfolio of multi-manager hedge fund strategies
- h. describe how factor models may be used to understand hedge fund risk exposures
- i. evaluate the impact of an allocation to a hedge fund strategy in a traditional investment portfolio
19. Overview of Private Wealth Management
- a. contrast private client and institutional client investment concerns
- b. discuss information needed in advising private clients
- c. identify tax considerations affecting a private client’s investments
- d. identify and formulate client goals based on client information
- e. evaluate a private client’s risk tolerance
- f. describe technical and soft skills needed in advising private clients
- g. evaluate capital sufficiency in relation to client goals
- h. discuss the principles of retirement planning
- i. discuss the parts of an investment policy statement (IPS) for a private client
- j. prepare the investment objectives section of an IPS for a private client
- k. evaluate and recommend improvements to an IPS for a private client
- o. discuss ethical and compliance considerations in advising private clients
- p. discuss how levels of service and range of solutions are related to different private clients
20. Topics in Private Wealth Management
- a. compare taxation of income, wealth, and wealth transfers
- b. describe global considerations of jurisdiction that are relevant to taxation
- c. discuss and analyze the tax efficiency of investments
- d. analyze the impact of taxes on capital accumulation and decumulation in taxable, tax-exempt, and tax-deferred accounts
- e. explain portfolio tax management strategies and their application
- f. discuss risk and tax objectives in managing concentrated single-asset positions
- g. describe strategies for managing concentrated positions in public equities
- h. describe strategies for managing concentrated positions in privately owned businesses and real estate
- i. discuss objectives—tax and non-tax—in planning the transfer of wealth
- j. discuss strategies for achieving estate, bequest, and lifetime gift objectives in common law and civil law regimes
- k. describe considerations related to managing wealth across multiple generations
21. Risk Management for Individuals
- a. compare the characteristics of human capital and financial capital as components of an individual’s total wealth
- b. discuss the relationships among human capital, financial capital, and economic net worth
- c. describe an economic (holistic) balance sheet
- d. discuss risks (earnings, premature death, longevity, property, liability, and health risks) in relation to human and financial capital
- e. describe types of insurance relevant to personal financial planning
- f. describe the basic elements of a life insurance policy and how insurers price a life insurance policy
- g. discuss the use of annuities in personal financial planning
- h. discuss the relative advantages and disadvantages of fixed and variable annuities
- i. discuss how asset allocation policy may be influenced by the risk characteristics of human capital
- j. recommend and justify appropriate strategies for asset allocation and risk reduction when given an investor profile of key inputs
27. Case Study in Risk Management-Private Wealth
- a. identify and analyze a family’s risk exposures during the early career stage
- b. recommend and justify methods to manage a family’s risk exposures during the early career stage
- c. identify and analyze a family’s risk exposures during the career development stage
- d. recommend and justify methods to manage a family’s risk exposures during the career development stage
- e. identify and analyze a family’s risk exposures during the peak accumulation stage
- f. recommend and justify methods to manage a family’s risk exposures during the peak accumulation stage
- g. identify and analyze a family’s risk exposures during the early retirement stage
- h. recommend and justify a plan to manage risks associated with an individual’s retirement lifestyle goals
