Early retirement, typically around age 65, marks a significant life transition. Clients in this stage aim to stop working and begin utilizing their accumulated financial resources for their lifestyle needs. Advisors should maintain up-to-date records as clients in early retirement…

The peak accumulation years represent a phase when individuals enjoy the culmination of their professional expertise, ideally resulting in the highest lifetime earnings. This stage follows the career development phase and precedes retirement. As in previous life stages, advisors must…

The career development stage involves clients who have progressed economically. Advisors in this stage must update all client data, including income, pensions, budgets, and economic balance sheets. Unlike the early career stage, clients in the career development stage often: Possess…

The risk management process consists of four steps for individuals: State the objective. Pinpoint risks. Assess risks and choose appropriate methods to manage it. Observe outcomes and risk exposures and make adjustments in methods as needed. An economic balance sheet…

Institutional investors often employ an active risk budget, typically gauging how much their portfolio deviates from the investment policy targets annually, often as a tracking error limit. This limit might be increased to seek higher returns or decreased to reduce…

It is a fact that the Code of Ethics and Standards of Professional Conduct apply to all CFA stakeholders and that candidates hoping to pass the exams need to be well versed in the Ethics material. This Los provides a…

This section of the curriculum presents a case in which a university endowment is deciding on its asset allocation, as well as its liquidity needs. This summary may be used in conjunction with the reading as a synopsis or may…

An illiquidity premium is a return earned by investors for the commitment of capital for an uncertain amount of time. In other words, it is a charge for the usage of money. Illiquidity, or liquidity premiums as they are also…

Liquidity risk involves a cost associated with locking up investor capital for an uncertain duration. Large institutional investors must plan their portfolio's liquidity to maximize fund efficiency. For example, an endowment funding college student aid may need to distribute funds…

Verification involves an independent third party reviewing a firm’s GIPS® procedures and confirming compliance. It doesn’t verify underlying calculations but checks if the firm follows GIPS® guidelines. Independent verification enhances a firm’s reputation for honesty and ethical standards. Selecting a…