Finastra Assessment Test Finastra Assessment Wealth and Investment Management 1 — Questions and Answers
Question 1: What is the primary difference between discretionary and advisory wealth management?
- In discretionary management, the manager makes investment decisions without prior client approval (Correct answer)
- Advisory management involves the manager making all investment decisions independently
- Discretionary management requires client approval for each individual trade
- Advisory management is only available to institutional clients
Correct answer: In discretionary management, the manager makes investment decisions without prior client approval
Discretionary wealth management gives the portfolio manager authority to buy and sell investments on behalf of the client without seeking approval for each transaction.
Question 2: Which Finastra solution is designed for wealth management and private banking?
- Fusion Wealth (Correct answer)
- Fusion Phoenix
- Fusion Loan IQ
- Fusion Payments
Correct answer: Fusion Wealth
Fusion Wealth is Finastra's platform for wealth management, enabling institutions to manage investment portfolios, client relationships, and advisory services.
Question 3: What is a 'robo-advisor' in the context of digital wealth management?
- An automated platform that provides algorithm-driven financial planning with minimal human supervision (Correct answer)
- A physical robot used in bank branches to assist customers with investments
- An AI system that replaces human relationship managers in private banking
- A chatbot designed to answer customer service queries for investment accounts
Correct answer: An automated platform that provides algorithm-driven financial planning with minimal human supervision
Robo-advisors use algorithms to automatically build and rebalance investment portfolios based on client risk profiles and goals, typically at lower cost than traditional advisors.
Question 4: What does ESG stand for in investment management?
- Environmental, Social, and Governance (Correct answer)
- Equity, Securities, and Growth
- Economic, Stability, and Growth
- Emerging, Sustainable, and Global
Correct answer: Environmental, Social, and Governance
ESG investing considers Environmental, Social, and Governance factors alongside financial returns when evaluating investment decisions.
Question 5: In portfolio management, what is 'rebalancing'?
- Realigning portfolio weights back to target allocations after market movements (Correct answer)
- Switching all investments from equities to fixed income
- Adding new capital contributions to an investment portfolio
- Closing underperforming investments and replacing them with top performers
Correct answer: Realigning portfolio weights back to target allocations after market movements
Portfolio rebalancing involves buying or selling assets to restore the portfolio to its target asset allocation after market movements cause drift from the original plan.
Question 6: What is the purpose of a KYC (Know Your Customer) process in wealth management?
- Verifying client identity and understanding their financial profile to prevent money laundering (Correct answer)
- Tracking customer satisfaction scores for relationship managers
- Identifying key customer accounts for targeted marketing campaigns
- Measuring the performance of customer portfolios against benchmarks
Correct answer: Verifying client identity and understanding their financial profile to prevent money laundering
KYC processes verify client identity, assess financial situation and risk tolerance, and ensure compliance with anti-money laundering regulations.
Finastra Assessment Test Finastra Assessment Wealth and Investment Management 1
What is the primary difference between discretionary and advisory wealth management?