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CISI Certification
ICWIM Exam
CISI.ICWIM.v2025-08-09.q74 Dumps

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Question 1

Which of the following elements would be included in a recommendation report to a client?

A.Inflation rate
B.Interest rate
C.Protection
D.Previous arrangements

Correct Answer: D

A recommendation report (or suitability report) is a formal document provided by financial advisers to clients. It outlines investment recommendations and justifications based on the client's personal circumstances.
* Why is Option D Correct?
* The FCA requires firms to consider a client's existing investments, pensions, and insurance policies before making recommendations.
* This ensures that clients are not sold duplicate or unsuitable products.
* Reviewing previous arrangements helps advisers identify gaps in financial planning.
* What Else Is Included in a Recommendation Report?
* Investment objectives & risk tolerance.
* Tax considerations.
* Cost disclosures and fees.
* Why Not Other Options?
* A (Inflation rate) # While inflation is considered, it is not a mandatory section in suitability reports.
* B (Interest rate) # Relevant for fixed income investments, but not always necessary.
* C (Protection) # Only included if insurance products are being recommended.
# Reference: FCA Conduct of Business Sourcebook (COBS 9 - Suitability Reports), CISI Wealth & Investment Management.

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Question 2

What financial principle requires an adviser to gather extensive information from a client before making a recommendation?

A.Disclosure
B.Transparency of trading
C.Risk reduction
D.Know your customer

Correct Answer: D

* Know Your Customer (KYC) Principle:
* Advisers must gather extensive client information (e.g., financial goals, risk tolerance, income) to provide tailored recommendations.
* KYC ensures compliance with regulatory frameworks and aligns investment strategies with client needs.
* Elimination of Other Options:
* A: Disclosure focuses on transparency of fees and risks, not information gathering.
* B: Transparency of trading pertains to market operations, not advisory practices.
* C: Risk reduction is a goal, not a principle requiring client data.
References:
* ICWIM Module 4: Ethical and Regulatory Practices: Focus on the KYC framework.

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Question 3

When investors wish to sell units in mutual funds, there is a risk of the fund being gated. Why might this happen?

A.To ensure any tax deferral benefits are not lost
B.To ensure that the commission as a proportion of the fund remains small
C.Because the investor has not held the units past the 'lock-in' period
D.To allow fund managers to raise enough funds to pay out to those wishing to sell their units

Correct Answer: D

* Fund Gating:
* Gating occurs when fund managers temporarily restrict redemptions to protect the remaining investors and ensure liquidity.
* This allows the fund to sell illiquid assets to generate sufficient cash for redemptions.
* Elimination of Other Options:
* A: Tax deferral benefits are irrelevant to gating.
* B: Commission proportions are unrelated to liquidity.
* C: Lock-in periods are predetermined and not linked to gating.
References:
* ICWIM Module 3: Focus on fund structures and liquidity management.

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Question 4

Which of the following is an example of a mandatory corporate action with options?

A.Consolidation
B.Rights issue
C.Share buyback
D.Takeover acceptance

Correct Answer: B

# Reference: FCA Handbook (Corporate Actions), CISI Wealth & Investment Management.

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Question 5

Offshore foundations are often used as a suitable alternative to which similar type of arrangement?

A.Limited liability partnerships
B.Credit unions
C.Trusts
D.SICAVs

Correct Answer: C

Offshore foundations are often considered alternatives totrusts, as both are used for wealth structuring, asset protection, and estate planning. However, unlike trusts, foundations are independent legal entities and can provide greater control to the founder.
* Limited liability partnerships (A): LLPs are business entities, not typically used for wealth management.
* Credit unions (B): These are financial cooperatives, unrelated to wealth structuring.
* SICAVs (D): SICAVs are investment funds, not wealth-structuring vehicles.
References:
* International Certificate in Wealth & Investment Management: Comparison of trusts and offshore foundations in wealth management.
* Legal structures and their applications in estate and tax planning.

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