CIM Client Relations 5

Question 1

A client has a required minimum distribution and plans to buy a house within 12 months. Which IPS constraint is most directly affected?

Accepted Answer

Liquidity constraint

Answer

Known near-term cash needs are liquidity requirements the portfolio has to plan for.

Question 2

A client asks that the portfolio exclude tobacco and firearms companies. How should this be handled?

Accepted Answer

Document it as a unique circumstance or restriction in the IPS and implement it

Answer

Client-specific investment restrictions such as ESG exclusions belong in the IPS under unique circumstances.

Question 3

When onboarding a new client, why must the manager complete Know Your Customer (KYC) procedures?

Accepted Answer

To verify identity, meet AML rules, and understand the client's financial profile for suitable advice

Answer

KYC supports anti-money-laundering compliance and gives the basis for suitable recommendations.

Question 4

A client with a 30-year horizon and stable income wants to hold only money market funds. What is the manager's best course of action?

Accepted Answer

Educate the client on the long-term risk of inflation and shortfall, while respecting their final decision

Answer

The manager should explain the risk that an overly conservative portfolio won't meet long-term goals, then document the client's informed choice.

Question 5

Which client segment typically needs the most complex relationship management, including estate, tax, and multi-generational planning?

Accepted Answer

Ultra-high-net-worth families

Answer

UHNW families usually have complex structures, several stakeholders, and estate and tax issues that need coordinated advice.

CIM - Chartered Investment Manager Practice Test