AIF CERTIFICATION SCRIPT 2026
QUESTIONS WITH SOLUTIONS
GRADED A+
◍ Name the four steps of the fiduciary quality management system.
Answer: Step 1 = OrganizeStep 2 = FormalizeStep 3 = ImplementStep 4:
Monitor
◍ Describe the Organize stage.
Answer: During the organize stage, the investment fiduciary identifies laws,
governing documents, and other sources of guidance for fiduciary conduct.
◍ Describe the Formalize stage.
Answer: During the formalize stage, the investment fiduciary identifies the
substantive investment objectives and constraints, formulates asset
allocation strategies, and adopts an investment policy statement to guide the
investment decision-making process.
◍ Describe the Implement stage.
Answer: The implement stage is when investment and service provider due
diligence is performed and decisions about investment safe harbors are
made.
◍ Describe the Monitor stage.
Answer: During the monitoring stage, the investment fiduciary engages in
periodic reviews to ensure that the investment objectives and constraints are
being met and that the Prudent Practices are consistently applied.
◍ First Prudent Practice in Organize stage.
Answer: The Investment Steward demonstrates an awareness of fiduciary
duties and responsibilities. The Investment Steward complies with all
fiduciary laws and rules that apply to the Steward's responsibility. The
, Steward complies with all applicable Practices and procedures defined in the
Prudent Practices handbook. The Steward adheres to the professional
standards of conduct and code(s) of ethics required by law, regulation, their
organization or employer, and all applicable organizations in which they are
members.
◍ Second Prudent Practice in Organize stage.
Answer: Investments and investment services under the oversight of the
Investment Steward are consistent with applicable governing documents.
Investments held in trust are managed in accordance with the documents
governing the trust. Investments are managed and investment services are
retained in accordance with governing documents, including the investment
policy statement. Documents pertaining to the investment management
process, including records of decision made by the Investment Steward, are
organized and retained in a centralized location.
◍ Third Prudent Practice in Organize stage.
Answer: The roles and responsibilities of all involved parties (fiduciaries
and non-fiduciaries) are defined and documented. The roles and
responsibilities of all involved parties are documented in the investment
policy statement. All involved parties have acknowledged their fiduciary or
non-fiduciary status in writing. Investment committees have a defined set of
by-laws or operating procedures to which they adhere. The Investment
Steward has a documented disaster recovery plan that is reviewed and tested
periodically.
◍ Fourth Prudent Practice in Organize stage.
Answer: The Investment Steward identifies conflicts of interest and
addresses conflicts in a manner consistent with the duty of loyalty. Policies
and procedures for overseeing and managing conflicts of interests, including
self-dealing, are defined. Conflicts of interest are avoided when possible and
always when required by law, regulations, and/or governing documents. The
Investment Steward discloses, and requires service providers to disclose, all
unavoidable conflicts of interest in writing and to manage such unavoidable
, conflicts in the best interest of the participants or beneficiaries.
◍ Fifth Prudent Practice in Organize stage.
Answer: The Investment Steward requires agreements with service
providers to be in writing and consistent with fiduciary standards of care.
The Investment Steward requires each service provider to make full written
disclosure of the services to be provided and the compensation
arrangements, affiliations, and fiduciary status of the service provider.
Agreements are periodically reviewed to ensure consistency with the
objectives of the investment portfolio and/or the needs of beneficiaries.
Comparative reviews of service agreements are conducted and documented
approximately every three years.
◍ Sixth Prudent Practice in Organize stage.
Answer: Portfolio assets are protected from theft and embezzlement. The
Investment Steward has a reasonable basis to believe assets are within the
purview of a viable judicial system. ERISA fiduciaries have the required
fidelity bond, if applicable. The Investment Steward ensures that appropriate
insurance, internal controls, and physical security measures reasonably
protect against theft and embezzlement. The Investment Steward verifies
that service providers that custody client assets have appropriate insurance.
Appropriate procedures are in place to secure beneficiary or plan data.
◍ First Prudent Practice in Formalize stage.
Answer: An investment time horizon has been identified for each investment
portfolio. Sources, timing, distribution, and uses of portfolio cash flows are
documented. In the case of a defined benefit retirement plan, an appropriate
asset/liability study has been factored into the time horizon. In the case of a
defined contribution retirement plan, the investment options provide for a
reasonable range of participant time horizons. In the case of a foundation or
endowment, a schedule of expected receipts and disbursements of gifts and
grants has been factored into the time horizon to the extent possible and an
estimated equilibrium spending rate has been established. In the case of a
trust or retail investor portfolio, the appropriate needs-based analysis has
QUESTIONS WITH SOLUTIONS
GRADED A+
◍ Name the four steps of the fiduciary quality management system.
Answer: Step 1 = OrganizeStep 2 = FormalizeStep 3 = ImplementStep 4:
Monitor
◍ Describe the Organize stage.
Answer: During the organize stage, the investment fiduciary identifies laws,
governing documents, and other sources of guidance for fiduciary conduct.
◍ Describe the Formalize stage.
Answer: During the formalize stage, the investment fiduciary identifies the
substantive investment objectives and constraints, formulates asset
allocation strategies, and adopts an investment policy statement to guide the
investment decision-making process.
◍ Describe the Implement stage.
Answer: The implement stage is when investment and service provider due
diligence is performed and decisions about investment safe harbors are
made.
◍ Describe the Monitor stage.
Answer: During the monitoring stage, the investment fiduciary engages in
periodic reviews to ensure that the investment objectives and constraints are
being met and that the Prudent Practices are consistently applied.
◍ First Prudent Practice in Organize stage.
Answer: The Investment Steward demonstrates an awareness of fiduciary
duties and responsibilities. The Investment Steward complies with all
fiduciary laws and rules that apply to the Steward's responsibility. The
, Steward complies with all applicable Practices and procedures defined in the
Prudent Practices handbook. The Steward adheres to the professional
standards of conduct and code(s) of ethics required by law, regulation, their
organization or employer, and all applicable organizations in which they are
members.
◍ Second Prudent Practice in Organize stage.
Answer: Investments and investment services under the oversight of the
Investment Steward are consistent with applicable governing documents.
Investments held in trust are managed in accordance with the documents
governing the trust. Investments are managed and investment services are
retained in accordance with governing documents, including the investment
policy statement. Documents pertaining to the investment management
process, including records of decision made by the Investment Steward, are
organized and retained in a centralized location.
◍ Third Prudent Practice in Organize stage.
Answer: The roles and responsibilities of all involved parties (fiduciaries
and non-fiduciaries) are defined and documented. The roles and
responsibilities of all involved parties are documented in the investment
policy statement. All involved parties have acknowledged their fiduciary or
non-fiduciary status in writing. Investment committees have a defined set of
by-laws or operating procedures to which they adhere. The Investment
Steward has a documented disaster recovery plan that is reviewed and tested
periodically.
◍ Fourth Prudent Practice in Organize stage.
Answer: The Investment Steward identifies conflicts of interest and
addresses conflicts in a manner consistent with the duty of loyalty. Policies
and procedures for overseeing and managing conflicts of interests, including
self-dealing, are defined. Conflicts of interest are avoided when possible and
always when required by law, regulations, and/or governing documents. The
Investment Steward discloses, and requires service providers to disclose, all
unavoidable conflicts of interest in writing and to manage such unavoidable
, conflicts in the best interest of the participants or beneficiaries.
◍ Fifth Prudent Practice in Organize stage.
Answer: The Investment Steward requires agreements with service
providers to be in writing and consistent with fiduciary standards of care.
The Investment Steward requires each service provider to make full written
disclosure of the services to be provided and the compensation
arrangements, affiliations, and fiduciary status of the service provider.
Agreements are periodically reviewed to ensure consistency with the
objectives of the investment portfolio and/or the needs of beneficiaries.
Comparative reviews of service agreements are conducted and documented
approximately every three years.
◍ Sixth Prudent Practice in Organize stage.
Answer: Portfolio assets are protected from theft and embezzlement. The
Investment Steward has a reasonable basis to believe assets are within the
purview of a viable judicial system. ERISA fiduciaries have the required
fidelity bond, if applicable. The Investment Steward ensures that appropriate
insurance, internal controls, and physical security measures reasonably
protect against theft and embezzlement. The Investment Steward verifies
that service providers that custody client assets have appropriate insurance.
Appropriate procedures are in place to secure beneficiary or plan data.
◍ First Prudent Practice in Formalize stage.
Answer: An investment time horizon has been identified for each investment
portfolio. Sources, timing, distribution, and uses of portfolio cash flows are
documented. In the case of a defined benefit retirement plan, an appropriate
asset/liability study has been factored into the time horizon. In the case of a
defined contribution retirement plan, the investment options provide for a
reasonable range of participant time horizons. In the case of a foundation or
endowment, a schedule of expected receipts and disbursements of gifts and
grants has been factored into the time horizon to the extent possible and an
estimated equilibrium spending rate has been established. In the case of a
trust or retail investor portfolio, the appropriate needs-based analysis has
