Accredited Wealth Management Advisor Practice Exam

In terms of investment strategies, who typically funds the employer’s promise to pay deferred amounts to employees?

1. The employees fund it.

2. The employer funds it through insurance.

3. The government funds it.

4. Shareholders fund it.

The correct answer is: The employer funds it through insurance.

In terms of investment strategies for funding an employer's promise to pay deferred amounts to employees, the most common approach is that the employer funds this obligation through insurance. This typically involves the employer purchasing insurance policies that can help cover the costs associated with future payouts due to deferred compensation plans, retirement benefits, or similar arrangements. Using insurance as a funding strategy allows the employer to manage risk and potentially access benefits such as tax advantages or stability in payout amounts. By doing so, employers can assure employees that the deferred amounts will be honored when they become due, creating a reliable framework for both parties. The other choices, while they may contain elements of truth in different contexts (e.g., employees contributing to their own retirement plans in some cases, or investments from shareholders influencing a company's approach to employee benefits), do not specifically reflect the mechanism by which employers typically secure and fulfill their promises to pay deferred amounts. Thus, funding through insurance is recognized as the standard practice in this scenario.