Series 65 — Strategies & Client Recommendations flashcards
10 of 78 cards free to study here · 6 topics · the whole deck is built into Willys
Client profiles and account types, CAPM, market efficiency and modern portfolio theory, allocation and management styles, taxation and estate concepts, retirement and education plans, orders and margin, and return measures for the Series 65.
Learn deck · part of NASAA Series 65 and Series 66 · written against: NASAA Series 65 and 66 content outlines; Uniform Securities Act, NASAA model rules and the Investment Advisers Act of 1940 as of 2026. Updated 2026-10-10.
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When an adviser builds a client profile, which facts are financial and which are nonfinancial?Financial: income, assets, liabilities, cash flow and tax bracket. Nonfinancial: age, health, family situation, investment experience, attitudes toward risk and personal values.Client Profile & Accounts
Why: both shape suitability; two clients with the same net worth can need very different portfolios. -
Before a client invests for long-term growth, what cushion should usually be in place?An emergency fund of several months of living expenses (commonly three to six) in safe, liquid assets.Client Profile & Accounts
Why: without it, a job loss or large bill could force her to sell long-term holdings at a bad time. -
An adviser uses CAPM to set the return a client should require from a utility stock with a beta of 0.8. Treasury bills yield 4% and the market is expected to return 10%. What is the required return?8.8%.Capital Market Theory
Why: ; the stock earns the risk-free rate plus beta times the market risk premium. -
An analyst expects a stock to return 12%, but CAPM says its required return is 10%. Is the stock undervalued or overvalued?Undervalued — it plots above the security market line.Capital Market Theory
Why: it offers more return than its systematic risk requires, so buying should push its price up until the excess disappears. -
How does strategic asset allocation differ from tactical asset allocation?Strategic allocation sets long-term target weights based on the client's goals and risk; tactical allocation makes short-term departures from those targets to exploit expected market conditions.Portfolio Management
Why: tactical shifts are a form of active management and add the risk of being wrong. -
A client's 60/40 stock-bond portfolio drifts to 70/30 after a strong stock rally. What does rebalancing do, and why?It sells stocks and buys bonds to restore the 60/40 targets.Portfolio Management
Why: it brings risk back to the level the client chose and, as a side effect, trims winners and adds to laggards. -
A client buys a stock on March 10 and sells it at a gain on March 10 of the following year. Is the gain long-term or short-term?Short-term.Taxation
Why: a long-term gain requires holding for more than one year; she would need to sell on March 11 or later. -
A client sells a stock at a loss in her taxable account and buys the same stock in her IRA two weeks later. What happens to the loss?It is disallowed under the wash-sale rule, and it is not added to the IRA's basis, so the loss is permanently lost.Taxation
Why: the IRS treats a repurchase in the client's IRA as a purchase by the client. -
Which retirement plans does ERISA govern, and which major types does it exclude?ERISA governs private-sector employer plans; it excludes government plans and most church plans.Retirement & Education Plans
Why: the law protects private employees' benefits with rules on fiduciary conduct, vesting, reporting and disclosure. -
What is a not-held order?An order that gives the representative or trader discretion over the time and price of execution.Trading & Performance
Why: the client has chosen the security, the amount and the action, so the order needs no written discretionary authority.
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About these cards
Review status: Second-reader reviewed, with corrections applied.
Checked against:
- Topic outline follows the NASAA Series 65 content outline effective June 12, 2023 (outline only; no outline text reproduced).
- Checked against IRS Publications 550, 551, 559, 560, 575, 590-A, 590-B and 970, ERISA (29 U.S.C. 1001 et seq.) and DOL regulation 29 CFR 2550.404c-1; public domain U.S. government sources.
- Original wording; no textbook, prep-course or question-bank text copied. Figures indexed yearly, such as exclusion and exemption amounts and contribution limits, are excluded.
- The Series 65 and Series 66 exams are developed by NASAA and administered by FINRA; neither is affiliated with, or endorses, this product.
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