International Examinations Syllabus

Certified International Wealth Manager (CIWM)

October 2012

CIWM International Examinations Syllabus, Jan 2012

CONTENTS
INTRODUCTION ..................................................................................................................... 1 CIWM EXAMINATION SCHEME .................................................................................................... 1 FOUNDATION EXAMINATION ................................................................................................. 3 FINANCIAL ACCOUNTING AND FINANCIAL STATEMENT ANALYSIS ........................................................... 3 EQUITY VALUATION AND ANALYSIS .............................................................................................. 3 CORPORATE FINANCE ............................................................................................................... 3 ECONOMICS ........................................................................................................................... 3 FIXED INCOME VALUATION AND ANALYSIS ..................................................................................... 4 DERIVATIVE VALUATION AND ANALYSIS ........................................................................................ 4 PORTFOLIO MANAGEMENT ......................................................................................................... 4 FINAL EXAMINATION............................................................................................................. 5 WEALTH MANAGEMENT ............................................................................................................ 5 RELATIONSHIP MANAGEMENT ..................................................................................................... 5 BEHAVIOURAL FINANCE ............................................................................................................ 6 REAL ESTATE VALUATION AND ANALYSIS....................................................................................... 6

NATIONAL EXAMINATION...................................................................................................... 7

CIWM International Examinations Syllabus, Jan 2012

INTRODUCTION
This syllabus lists the topics covered in the international examinations of the professional designation Certified International Wealth Manager CIWM. For simple cross-referencing, it corresponds with the table of contents of the training manuals for this programme. CIWM Examination Scheme The CIWM examination scheme comprises international examinations as well as a national/regional examination. The international examinations are divided into two levels the Foundation and Final level. Both levels test a global common knowledge base and are completed by all CIWM candidates worldwide. The national/regional specific examination is set by individual AIWM training providers. It examines knowledge that affects investment decision-making and that is required for domestic and international wealth planning and management. The examinations combine multiple choice and open questions that aim to test the understanding of key concepts and their application to investment decision making. The examinations are held in March and September annually.

INTERNATIONAL EXAMINATIONS Foundation Examination Topic Areas Financial Analysis and Financial Statement Analysis, Equity Valuation and Analysis, Corporate Finance Fixed Income Valuation and Analysis, Economics Derivative Valuation and Analysis, Portfolio Management Total time Final Examination Topic Areas Wealth Management Relationship Management, Behavioural Finance, Real Estate Valuation and Analysis Total time Examination Duration (Minutes) 180 180 360 (i.e. 6 hours) Examination Duration (Minutes) 190 160 190 540 (i.e. 9 hours)

CIWM International Examinations Syllabus, Oct 2012

NATIONAL / REGIONAL EXAMINATION Topic area Regulatory Practices, Taxation, Wealth Products, International Wealth Planning, Ethics, Domestic Wealth Planning, Estate Planning Total time Examination Duration (Minutes) 240 240 (i.e. 4 hours)

CIWM International Examinations Syllabus, Oct 2012

FOUNDATION EXAMINATION

Financial Accounting and Financial Statement Analysis

1 1.1 1.2 2 2.1 2.2 2.3 2.4 3 3.1 3.2 Financial reporting environment The financial statements Financial reporting issues Framework for the preparation and presentation of financial statements Objective of financial statements Accounting conventions Fundamental definitions Criteria for accounting recognition Statement of cash flows Rationale for statement of cash flows Relation between income flows and cash flows Income recognition Criteria for revenues recognition Long-term construction contracts Criteria for expense recognition Accounting for stock options and similar benefits Assets, Liabilities and shareholders equities Assets Liabilities Shareholders equity Provisions Foreign currency transactions Foreign currency transactions The translation of financial statements into a foreign currency Hyperinflationary economies Financial reporting and financial statement analysis Income vs. cash flows Quality of earnings and earnings management Earnings per share Analytical tools for assessing profitability and risk Profitability analysis Risk analysis

Equity Valuation and Analysis

1 1.1 1.2 2 2.1 2.2 2.3 Equity markets and structures Types of equity securities Indices Valuation model of common stock Dividend discount models Free cash flow model Measures of relative value

Corporate Finance
1 1.1 1.2 1.3 1.4 1.5 1.6 2 2.1 2.2 2.3 3 3.1 4 4.1 4.2 Fundamentals of corporate finance Goals of corporate finance Finance function and firms objectives Role of the financial manager Principles of valuation Discounted cash flow Capital budgeting Long term finance decision Investment decision Project evaluation Liquidation and reorganisation Short-term finance decision Short-term financing Capital structure and dividend policy Leverage and the value of the firm Dividend policy

4 4.1 4.2 4.3 4.4

5 5..1 5.2 5.3 5.4 6 6.1 6.2 6.3 7 7.1 7.2 7.3 8 8.1 8.2

Economics
1 1.1 1.2 1.3 1.4 1.5 1.6 Macroeconomics: the basics Major macroeconomics concepts and variables The basic model of output and interest rates in a closed economy The basic model of a financial market in a closed economy The IS-LM model The labour market General equilibrium in the real, financial and labour markets Macroeconomic dynamics Inflation vs. unemployment: The great trade-off

2 2.1

CIWM International Examinations Syllabus, Oct 2012

3.1 3.2 3.3 3.4

Open economy macroeconomics: the balance of payments and the exchange rate The balance of payments The exchange rate Exchange rate, prices and interest rates Statistical behaviour of the exchange rate

Derivative Valuation and Analysis

1

Futures and forward contracts

1.1 1.2 1.3 1.4 1.5

Basic characteristics of forward and futures contracts Mechanics of trading in futures markets Examples of various futures contracts Futures valuation and analysis Introduction to hedging strategies using futures Options Basic characteristics of options contracts Options valuation Option pricing models Binomial pricing model Sensitivity analysis of options premiums

Fixed Income Valuation and Analysis

2

1 1.1 1.2 1.3 1.4 1.5 1.6 2 2.1 2.2 2.3 2.4 2.5 2.6

Fundamentals Main characteristics Types of fixed income securities Money market instruments Government Bonds Corporate securities Indices Time value of money Time value of money Bond yield measures Term structure of interest rates Bond price analysis Risk measurement Usage

2.1 2.2 2.3 2.4 2.5

Portfolio Management
1 Modern portfolio theory 1.1 The risk/return framework 1.2 Efficient markets 1.3 Portfolio Theory 1.4 Capital asset pricing model (CAPM) 2 2.1 2.2
3

3 Bonds with warrants 3.1 Investment characteristics 3.2 Value of a warrant 4 4.1 4.2 4.3 5 5.1 6 6.1 6.2 Convertible bonds Investment characteristics Value of conversion benefits Investment strategies
Callable bonds

Investment Policy Individual investors Institutional investors Asset allocation Asset allocation overview Type of asset allocation Asset/liability-analysis and management Introduction Modelling liabilities Modelling assets Surplus and funding ratios Integrated optimization Implementation of strategies

3.1 3.2 4

Investment characteristics Fixed Income portfolio management strategies Active management Passive management

4.1 4.2 4.3 4.4 4.5 4.6

5 Practical portfolio management 5.1 Derivatives in portfolio management 5.2 International investments 6 6.1 6.2 Performance measurement and evaluation Risk-return measurement Risk-adjusted performance measures

CIWM International Examinations Syllabus, Oct 2012

FINAL EXAMINATION

Wealth Management
1 1. 2. 3. 4. 2 2.1 2.2 2.3 3 3.1 3.2 3.3 3.4 3.5
Basic concepts

Relationship Management
1 1.1 1.2 1.3 Interpersonal relationship and wealth management The interpersonal relationship The wealth manager and his client: the relationship interpretation model Interdependence and expectations in the wealth manager-to-client relationship Effectiveness and efficiency in relationship management
The idea of wealth through different cultures and the club of the wealthy

Comparing outcomes of investments Utility functions and indifference curves Expected utility approach Expected utility and the meanvariance framework
Asset and liabilities categories

Assets and funds Structured products Liabilities

Clients profiles

1.4
2

Setting return objectives Time horizon Liquidity need Taxes Keep the profile alive

2.1 2.2 3 3.1

The idea of wealth The club of the wealthy Effective management of the client relationship Information as a strategic resource for the wealth manager Where to look for information The client as a primary source of information Communication and negotiation Intercultural communication The negotiation Efficient customer relations management in wealth management The lifecycle of a relationship Strategy for an efficient relationship management Customer relations management at the operating level The industrial aspects of wealth management Customer originated processes COP Organizational models in the business The competence of a wealth manager

4 The financial plan: Assessing the clients assets and liabilities 4.1 Pro forma financial statements 4.2 Base currency 4.3 Assets 4.4 Liabilities 4.5 Revenues and the evolution of revenues 4.6 Consumption and growth in consumption 4.7 Cash surplus 4.8 Taxation 4.9 Financial analysis 5 5.1 5.2 5.3
5.4

3.2 3.3 3.4 3.5 3.6 4 4.1 4.2 4.3 5 5.1 5.2 5.3

Asset allocation, portfolio choice and management styles Client constraints Construction of the efficient frontiers Determination of the optimal portfolio and the corresponding asset allocation with the client Periodical review of the assumptions, co-operation with the research and economic forecast departments
Funds selection

6 6.1 6.2 6.3

Advantages and disadvantages of mutual funds The fund selection process Tax considerations

CIWM International Examinations Syllabus, Oct 2012

Behavioural Finance
1
1.1

1.2 2 2.1 2.2 2.3 2.4 2.5

The decision-making process: limits of normative theory Decision problems, characteristics and the meaning of rationality in finance The expected utility hypothesis and the independence axiom Structuring the wealth management process Needs analysis Personal asset and liability management Investors profile Optimal asset allocation Documentation, reporting and evaluating the investment advice Product design a case study with structured products The question to be analysed The clients profile and hypothesis Products to be analysed Prospect theory evaluation Portfolio considerations and scientific assessment of structured products
Inter-temporal asset allocation

3 3.1 3.2 3.3 3.4 3.5 4 4.1 4.2

Introduction Optimal asset allocation

Real Estate Valuation and Analysis

1 Valuation and indices of real estate 1.1 Valuation methods 1.2 Real estate indices 2 2.1 2.2 2.3 3 3.1 3.2 3.3 3.4 3.5 Integration of the real estate in the mixed-asset portfolio Return and risks of real estate Correlation between the returns on various asset classes Determining the share of real estate in optimal portfolios Financing of real estate Introduction: equity and debt in real estate investment Market for mortgage debt Financial structure of real estate investors: debt and equity Mortgage contract features Mortgage valuation and pricing

CIWM International Examinations Syllabus, Oct 2012

NATIONAL EXAMINATION

1.

Basic concepts 1.1 Time Value of Money 1.2 Financial Planning 1.3 Wealth Management 1.4 Wealth Management sector in India Domestic Wealth Planning 2.1 Market trends in wealth planning Overview Todays families & their tax & legal needs

2.

6. Regulatory Practices 6.1 Regulatory bodies 6.2 Regulatory Overlap 6.3 Alternative Investment Fund Regulation 6.4 Guidelines for PMS & Structured Products 6.5 AML, KYC
7. Exchange of information and growing transparency between various Governments

3.

3.1 Legal needs of todays families 3.2 Tax needs of todays families 3.3 Overview of global developments decline of bank secrecy, information exchange, undeclared funds, tax regularization & money laundering. 3.4 Structuring of Family Office & governance mechanism 3.5 Valuation of family business 4. Principles of taxation of Individuals & their investments comparative review 4.1 Basic Concepts 4.2 Direct Tax Income Tax, Wealth Tax, Heads of Income 4.3 Indirect Taxes VAT/ GST & Custom duties, STT, DDT, Service Tax 4.4 HUFs and their special needs Estate Planning Basic Concepts Intestate Succession Hindu Succession Act The Muslim Personal Law (Shariat) Application Act 1937 Will, Probate & Nominations Trust POA Charity Land Records

7.1 International judicial assistance in tax matters 7.2 Global transparency and the move away from undeclared money 8. 8.1 8.2 8.3 8.4 8.4 Wealth Products Equity Direct Equity, MF, PMS Fixed Income- Bonds, CP, CD, MF Structured Products Insurance Life & General Retirement Savings Products- PPF, Small Savings Schemes 8.5 Alternative Investments Real Estate, REITS, Gold, Commodities, Art Fund, Wine Fund, Hedge Funds, Currency 8.6 International Products Real Estate, Equity, Super Funds 9. The taxation planning needs of the families and how to address them

5. 5.1 5.2 5.3 5.4

5.5 5.6 5.7 5.8 5.9

10. The non-tax needs of the families & how to address them 10.1 Charity planning, mitigating risks (for e.g. Divorce), second family, living wills, asset gathering & identification, privacy, succession and probate, asset protection & preservation, special assets, business succession, political risk, kidnapping & security, forced heirship, confidentiality, community property, mobility, etc.

CIWM International Examinations Syllabus, Oct 2012

11. International Wealth Planning 11.1 Market trends in international wealth planning. 11.2 Cross-border tax planning 11.3 Structuring, establishment & oversight of off-shore trusts 11.4 Wealth Management & Tax planning strategies for NRIs & Expatriates 11.5 Double-taxation avoidance treaties 11.6 Tax friendly nations 11.7 International Asset Allocation 11.8 Structure & Strategies for foreign investors 11.9 Mobility planning 11.10 Expatriation tax and legal issues, and planning considerations 11.11 Pre-immigration tax and legal issues, and planning considerations 11.12 Changing nationalities as a tax-saving measure

CIWM International Examinations Syllabus, Oct 2012

Contact address
Principal Office AIWM India Regus, Level 9, Platina, G Block, Plot C-59, Bandra-Kurla Complex, Bandra (E), Mumbai 400051 Ph: +91 22 6700 0572 Fax: +91 22 6700 0600

Regional Office AIWMI Regus, 15th Floor Eros Corporate Tower Nehru Place, New Delhi- 110 019 Email: info@aiwmindia.com, Website: www.aiwmindia.com

See www.aiwmindia.com for the contact details of your local training partner

AIWM India 2012

CIWM International Examinations Syllabus, October 2012