Chapter 10

Question 1

Integrity

Answer 1

The firm should observe high standards of integrity and fair dealing (In other words, they should act in the best interests of their customers)

Question 2

Skill, care, and diligence

Answer 2

A firm should act with due skill, care, and diligence

Question 3

Market practices

Answer 3

High standards
Comply
Applies

Question 4

Information about customers

Answer 4

Seek
Exercises
Circumstances
Investment objectives

Question 5

Information for customers

Answer 5

Reasonable
Comprehensible
Balanced
Full
Responsibilities

Question 6

Conflicts of interest

Answer 6

Avoid
Conflicts
Fair
Disclosure, internal rules of confidentiality
Declining to act

Question 7

Customer assets

Answer 7

Control
Responsible
Safeguard
Proper
Segregation and identification

Question 8

Financial resources

Answer 8

A firm should ensure that it maintains adequate financial resources to meet its investment business commitments and withstand the risks to which its business is subject

Question 9

Internal organization

Answer 9

Organize
Internal affairs
Responsible
Employs
Suitable

Question 10

Relations with regulators

Answer 10

A firm should deal with its regulators in an open and cooperative manner and keep the regulator promptly informed of anything concerning the firm which might be reasonably expected to be disclosed to it

Question 11

Effective decision making

Answer 11

Decisions should only be taken by persons or organizations with the skills, information, and resources necessary to take them effectively

Question 12

Clear objectives

Answer 12

Have clear objectives (depends on the firm)

Question 13

Focus on asset allocation

Answer 13

Strategic asset allocation decisions should receive a level of attention that fully reflects the contribution they can make towards achieving the fund’s investment objective

Question 14

Expert advice

Answer 14

Contracts for actuarial services and investment advice should be opened to separate competition

Question 15

Explicit mandates

Answer 15

Internal and external
Written
Objective
Attempting
Time

Question 16

Activism

Answer 16

Managers should incorporate an explicit strategy on activism, elucidating the circumstances in which they will intervene in a company, the approach they will use in doing so, and how they measure the effectiveness of this strategy

Question 17

Appropriate benchmarks

Answer 17

Consultation
Limits
Active or passive
Believe

Question 18

Performance measurement

Answer 18

Trustees should arrange for measurement of the performance of the fund and should make a formal assessment of their own procedures and decisions as trustees

Question 19

Transparency (A “Statement of investment principles” should set out)

Answer 19

Who
Why
Objective
Allocation
Mandates
Fee

Question 20

Effective operations

Answer 20

The selection of managers should also consider operational aspects, such as the separation of the front office and back office functions

Question 21

Regular reporting

Answer 21

Trustees should publish their statement of investment principles and the results of their monitoring of advisers and managers, and send them annually to members of the fund. The statement should explain why the fund has decided to depart from any of these principles.