Legal Constraints for Institutions

CFA Level III Portfolio Management
#1

Just did a EOC on Endowments. It states that Endowment is subject to both UMIFA and IRS rules for the Legal factor.

So, I am wondering if we are asked in the test about legal constraint for US Insitutions.

  1. Should we list IRS + UMIFA for Foundation and Endowment and IRS+ ERISA for DB and DC plans?

  2. Should we mention IRS + prudent investor rule for Life Insurance? Kaplan book states the prudent investor rule has been adopted by some states. So not sure on this.

#2

I’d include the IRS under taxes, not legal and regulatory.

#3

Prudent expert rule only applies for pensions right? Versus prudent investor.

#4

That specific rule “prudent expert rule” aka prudent man rule. yes only to pensions under ERISA

#5

Aka prudent man rule…is the prudent investor or expert rule aka the prudent man rule. I thought it was investor.

#6

The Prudent Man Rule is different from the Prudent Investor Rule, and each of them is different from the Prudent Expert Rule.

#7

Thanks for clearing up…I was rolling my eyes a bit to almostdones comment.

#8

Prudent Expert Rule replaced/revised version of the Prudent Man Rule under ERISA.

Prudent Investor is a different perspective stemming from the Prudent Man Rule.

So S2000 is correct they are all different, but in reality prudent man rule is an old outdated rule.

Don’t try going to the ERISA website, you’re eyes will for sure roll more since there is no official rule book. Only rulings from the past as guidance.

#9

Thank you for all the answers!!

#10

Dualy noted almostdoneiii thanks bud