NISM-Series-X-A-Investment Adviser (Level 1) Certification .

NISM-Series-X-A:Investment Adviser (Level 1)Certification Examination

NISM-Series-X-A: Investment Adviser (Level 1) Certification ExaminationWorkbook forNISM-Series-X-A: Investment Adviser (Level 1)Certification ExaminationNational Institute of Securities Marketswww.nism.ac.in1

NISM-Series-X-A: Investment Adviser (Level 1) Certification ExaminationThis workbook has been developed to assist candidates in preparing for the National Instituteof Securities Markets (NISM) Level 1 Certification Examination for Investment Advisers.Workbook Version: October 2015Published by:National Institute of Securities Markets National Institute of Securities Markets, 2015Plot 82, Sector 17, VashiNavi Mumbai – 400 703, IndiaAll rights reserved. Reproduction of this publication in any form without prior permission ofthe publishers is strictly prohibited.2

NISM-Series-X-A: Investment Adviser (Level 1) Certification ExaminationForewordNISM is a leading provider of high end professional education, certifications, training andresearch in financial markets. NISM engages in capacity building among stakeholders in thesecurities markets through professional education, financial literacy, enhancing governancestandards and fostering policy research. NISM works closely with all financial sector regulatorsin the area of financial education.NISM Certification programs aim to enhance the quality and standards of professionalsemployed in various segments of the financial services sector. NISM’s School for Certificationof Intermediaries (SCI) develops and conducts certification examinations and ContinuingProfessional Education (CPE) programs that aim to ensure that professionals meet the definedminimum common knowledge benchmark for various critical market functions.NISM certification examinations and educational programs cater to different segments ofintermediaries focusing on varied product lines and functional areas. NISM Certifications haveestablished knowledge benchmarks for various market products and functions such asEquities, Mutual Funds, Derivatives, Compliance, Operations, Advisory and Research.NISM certification examinations and training programs provide a structured learning plan andcareer path to students and job aspirants who wish to make a professional career in theSecurities markets. Till May 2015, NISM has certified nearly 4 lakh individuals through itsCertification Examinations and CPE Programs.NISM supports candidates by providing lucid and focused workbooks that assist them inunderstanding the subject and preparing for NISM Examinations. The book covers allimportant topics to enhance the quality of investment advisory and related services in thefinancial services industry. It covers topics related to the basics of investment advisory, stepsin the advisory process, making and implementation of a financial plan and evaluation ofdifferent products. This course teaches financial planning as an approach to investing,insurance, retirement planning and an aid for advisers to develop long term relationships withtheir clients. The book also discusses the concept of Income tax, Wealth tax and legalities ofEstate planning in personal finance, and regulatory aspects underlying advisory. It will beimmensely useful to all those who want to learn about the various aspects of investmentadvisory domain.Sandip GhoseDirector3

NISM-Series-X-A: Investment Adviser (Level 1) Certification ExaminationDisclaimerThe contents of this publication do not necessarily constitute or imply its endorsement,recommendation, or favoring by the National Institute of Securities Market (NISM) or theSecurities and Exchange Board of India (SEBI). This publication is meant for general readingand educational purpose only.The statements/explanations/concepts are of general nature and may not have taken intoaccount the particular objective/ move/ aim/ need/ circumstances of individual user/ reader/organization/ institute. Thus NISM and SEBI do not assume any responsibility for any wrongmove or action taken based on the information available in this publication.Therefore before acting on or following the steps suggested on any theme or before followingany recommendation given in this publication user/reader should consider/seek professionaladvice.The publication contains information, statements, opinions, statistics and materials that havebeen obtained from sources believed to be reliable and the publishers of this title have madebest efforts to avoid any errors. However, publishers of this material offer no guarantees andwarranties of any kind to the readers/users of the information contained in this publication.Since the work and research is still going on in all these knowledge streams, NISM and SEBIdo not warrant the totality and absolute accuracy, adequacy or completeness of thisinformation and material and expressly disclaim any liability for errors or omissions in thisinformation and material herein. NISM and SEBI do not accept any legal liability what so everbased on any information contained herein.While the NISM Certification examination will be largely based on material in this workbook,NISM does not guarantee that all questions in the examination will be from material coveredherein.AcknowledgementThis workbook has been developed jointly by the Certification Team of National Institute ofSecurities and Ms. Uma Shashikant of the Centre for Investment Education and Learning andMs. Sunita Abraham.NISM gratefully acknowledges the contribution of the Examination Committee for NISMSeries-X-A: Investment Adviser (Level 1) Certification Examination consisting ofrepresentatives of industry, educators, trainers and SEBI officials.4

NISM-Series-X-A: Investment Adviser (Level 1) Certification ExaminationAbout NISMNational Institute of Securities Markets (NISM) was established by the Securities andExchange Board of India (SEBI), in pursuance of the announcement made by the FinanceMinister in his Budget Speech in February 2005.SEBI, by establishing NISM, articulated the desire expressed by the Government of India topromote securities market education and research.Towards accomplishing the desire of Government of India and vision of SEBI, NISM deliversfinancial and securities education at various levels and across various segments in India andabroad. To implement its objectives, NISM has established six distinct schools to cater to theeducational needs of various constituencies such as investors, issuers, intermediaries,regulatory staff, policy makers, academia and future professionals of securities markets.NISM is mandated to implement Certification Examinations for professionals employed invarious segments of the Indian securities markets.NISM also conducts numerous training programs and brings out various publications onsecurities markets with a view to enhance knowledge levels of participants in the securitiesindustry.About NISM CertificationsThe School for Certification of Intermediaries (SCI) at NISM is engaged in developing andadministering Certification Examinations and CPE Programs for professionals employed invarious segments of the Indian securities markets. These Certifications and CPE Programs arebeing developed and administered by NISM as mandated under Securities and ExchangeBoard of India (Certification of Associated Persons in the Securities Markets) Regulations,2007.The skills, expertise and ethics of professionals in the securities markets are crucial inproviding effective intermediation to investors and in increasing the investor confidence inmarket systems and processes. The School for Certification of Intermediaries (SCI) seeks toensure that market intermediaries meet defined minimum common benchmark of requiredfunctional knowledge through Certification Examinations and Continuing ProfessionalEducation Programmes on Mutual Funds, Equities, Derivatives Securities Operations,Compliance, Research Analysis, Investment Advice and many more.Certification creates quality market professionals and catalyzes greater investor participationin the markets. Certification also provides structured career paths to students and jobaspirants in the securities markets.5

NISM-Series-X-A: Investment Adviser (Level 1) Certification ExaminationAbout the WorkbookThis workbook has been developed to assist candidates in preparing for the National Instituteof Securities Markets (NISM) Level 1 Certification Examination for Investment Advisers. NISMSeries-X-A: Investment Adviser (Level 1) Certification Examination along with the NISMSeries-X-B: Investment Adviser (Level 2) Certification Examination seeks to create a commonminimum knowledge benchmark for all associated persons registered as an investmentadviser and partners and representatives of investment advisers under SEBI (InvestmentAdvisers) Regulations, 2013 and offering investment advisory services.The book covers all important topics to enhance the quality of investment advisory andrelated services in the financial services industry. It covers topics related to the basics ofinvestment advisory, steps in the advisory process, making and implementation of a financialplan and evaluation of different products. This course teaches financial planning as anapproach to investing, insurance, retirement planning and an aid for advisers to develop longterm relationships with their clients. The book also discusses the concept of Income tax,Wealth tax and legalities of Estate planning in personal finance, and regulatory aspectsunderlying advisory.6

NISM-Series-X-A: Investment Adviser (Level 1) Certification ExaminationAbout the Level 1 Certification Examination for Investment AdviserThe examination seeks to create a common minimum knowledge benchmark for allassociated persons registered as an investment adviser and partners and representatives ofinvestment advisers under SEBI (Investment Advisers) Regulations, 2013 and offeringinvestment advisory services.NISM-Series-X-A: Investment Adviser (Level 1) Certification Examination is the level 1examination and NISM has also launched the NISM-Series-X-B: Investment Adviser (Level 2)Certification Examination.An associated person is required to pass both the levels (i.e. NISM-Series-X-A: InvestmentAdviser (Level 1) Certification Examination and NISM-Series-X-B: Investment Adviser (Level 2)Certification Examination) to fulfill the requirements under Regulation 7(2) of the SEBI(Investment Advisers) Regulations, 2013.The certification aims to enhance the quality of investment advisory and related services inthe financial services industry.Examination ObjectivesOn successful completion of the examination, the candidate should: Know the basics of investment advisory, steps in the advisory process, making andimplementation of financial plan.Understand how to evaluate different products, their suitability and how therecommendation of the same can impact investment risks, returns and strategies in apersonal finance environment for investors and prospective investors in the market.Get oriented to the Income tax, Wealth tax and legalities of Estate planning in personalfinance, and regulatory aspects underlying advisory.Get acquainted with financial planning as an approach to investing, insurance, retirementplanning and an aid for advisers to develop long term relationships with their clients.Assessment StructureThe examination consists of 100 questions of 1 mark each and should be completed in 2hours. The passing score on the examination is 60%. There shall be negative marking of 25%of the marks assigned to a question.How to register and take the examinationTo find out more and register for the examination please visit www.nism.ac.in7