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Full free lecture on the Basics of Portfolio Planning and Construction — CFA® Level 1 Portfolio Management for the 2026–2027 exams. This module is built around one document: the Investment Policy Statement — and one exam rule candidates must never miss: when ability and willingness to take risk conflict, you ALWAYS default to the lower one. Conflict = conservative. 📘 GET THE BATTLE-READY SUMMARY used on screen in this lecture (flowchart-style, exam-focused revision for every Level 1 reading): https://www.finquiz.com/cfa/level-1/summary/ In this lecture, a CFA charterholder covers the complete module: every component of the IPS, risk and return objectives (absolute vs. relative, ability vs. willingness), the five constraint categories, capital market expectations, strategic asset allocation and why it drives long-term performance, the utility function and efficient frontier, risk budgeting (SAA vs. TAA vs. security selection), rebalancing as an active decision, and the four ESG implementation approaches. ▶ Next module — Behavioral Biases of Individuals: [PASTE BEHAVIORAL BIASES VIDEO URL] ⏱ CHAPTERS 0:00 Intro 0:29 Why portfolio planning starts with the client 1:19 The Investment Policy Statement (IPS) 2:37 What an IPS really does 4:00 How the IPS is built 4:58 Major components of an IPS 8:52 Risk and return objectives 9:20 Absolute risk vs. relative risk vs. liability-driven risk 11:47 Risk tolerance: ability vs. willingness 14:15 Aggressive vs. conservative profiles (conflict = conservative) 17:03 Return objectives 18:10 Absolute vs. relative return (peer benchmark problems) 19:07 Before/after tax, real vs. nominal 21:30 IPS constraints 21:59 Liquidity needs 22:52 Time horizon 23:39 Tax concerns 24:28 Legal and regulatory constraints 25:04 Unique circumstances & ESG restrictions 26:48 Gathering client information 30:52 Advisory vs. execution-only relationships (MiFID II) 33:28 Portfolio construction: it starts with the IPS 34:40 Capital market expectations 36:27 Three ways to estimate expected returns 39:30 Strategic asset allocation (the policy portfolio) 40:40 Why asset allocation drives long-term performance 43:33 What is an asset class? 45:29 CFA Institute's four criteria for asset classes 47:48 Risk, return & correlation in allocation 50:04 The utility function and risk aversion 52:55 The efficient frontier 54:38 The optimal portfolio: where the SAA lives 57:18 Portfolio construction principles 58:09 Risk budgeting 59:04 Sources of return: SAA vs. TAA vs. security selection 1:01:45 Active vs. passive management (the zero-sum game) 1:02:52 Rebalancing and portfolio drift 1:04:18 New developments: ETFs, robo-advisors, risk parity 1:06:05 ESG in portfolio planning 1:07:46 Negative/positive screening, thematic & impact investing 1:09:07 Shareholder engagement & ESG benchmarks 1:10:43 Final exam takeaways 📚 FREE CFA LEVEL 1 RESOURCES (no purchase required) ► Free full-length Level 1 mock exam — 180 questions in two 90-question sessions, free with any account: https://app.finquiz.com/signup ► 629 free Level 1 practice questions: https://www.finquiz.com/cfa/level-1/question-bank/ ► Complete free Level 1 video course: https://www.finquiz.com/cfa-level-1-full-course-playlist/ 🎯 MORE LEVEL 1 STUDY MATERIALS ► Stanley Notes (LOS-aligned): https://www.finquiz.com/cfa/level-1/notes/ ► Formula Sheet: https://www.finquiz.com/cfa/level-1/formula-sheet/ ► Six Mock Exams: https://www.finquiz.com/cfa/level-1/mock-exam/ Every FinQuiz product is prepared and reviewed by our full-time team of CFA® charterholders — people who passed the same three exams you're preparing for. 🔔 SUBSCRIBE for the rest of the free Level 1 course — we're covering every Learning Module: https://www.youtube.com/@finquizpro?sub_confirmation=1 FinQuiz has been helping candidates pass the CFA exams since 2008. CFA Institute does not endorse, promote or warrant the accuracy or quality of FinQuiz. CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute. #CFA #CFALevel1 #PortfolioManagement