CFA Level I Exam · Guidance for Standard III: Duties to Clients

Standard III(D) Performance Presentation for CFA Level I

Updated 7 October 2026 · Fact-checked

Standard III(D) says members and candidates must make reasonable efforts to ensure that investment performance they communicate is fair, accurate, and complete. To solve questions, check whether the figures, period, benchmark and wording could mislead a client or prospect. Presenting misleading performance without such reasonable efforts is a violation. GIPS compliance is voluntary.

Understand Performance Presentation

Standard III(D) Performance Presentation sits under Duties to Clients. Its official wording is: "When communicating investment performance information, Members and Candidates must make reasonable efforts to ensure that it is fair, accurate, and complete."

Think of it as a truthfulness test. Clients and prospects use past performance to pick managers. If the numbers are cherry-picked, rounded up, or shown against a flattering benchmark, they decide on bad information. The standard protects that decision.

The standard covers performance information you communicate, whether it is your firm's own or a third party's. It applies to written and oral communication, and to both current clients and prospects. The duty is to make reasonable efforts. It does not demand perfection, but you must have a process and not ignore red flags. Presenting misleading performance without reasonable efforts to ensure it is fair, accurate and complete is a violation.

Typical ways to breach it: showing only the best-performing accounts or periods, using a benchmark that does not match the strategy, presenting a representative account that is not actually representative, and claiming a track record that belongs to a previous employer or another team. Also, if you present gross-of-fee returns, say so clearly, since clients pay fees. Guaranteeing future returns is a different problem. It is mainly a Standard I(C) Misrepresentation issue.

GIPS (Global Investment Performance Standards) are voluntary, ethics-based standards for calculating and presenting performance. Standard III(D) does not require GIPS compliance. But if a firm claims GIPS compliance, it must comply with all GIPS requirements. Under GIPS, claiming partial compliance, such as "compliant except for...", is not allowed. GIPS verification is optional and is performed at the firm-wide level. A firm may not claim that a single composite has been verified. Standard III(D) is broader in one way: it applies to any individual presenting performance, not only firms.

Key formulas to remember

Standard III(D) wording: Make reasonable efforts to ensure performance information is fair, accurate, and complete; Performance information must be fair, accurate and complete. A violation occurs when misleading information is presented without reasonable efforts to ensure it meets all three. Memorize all three words.
GIPS status: GIPS = voluntary; III(D) = mandatory for CFA members and candidates; Not using GIPS is not a violation. Misusing the GIPS claim is.
GIPS claim rule: Full compliance or no claim; Do not state partial compliance. Wording must be accurate if the firm claims compliance.
Composite and representative account: Use composites or fair representation of all comparable accounts; Showing only one best account misleads unless it is truly representative.
Gross vs net: Label gross-of-fees or net-of-fees clearly; Unlabeled returns can mislead clients about what they earned.

How to solve Performance Presentation questions

Use this method for any III(D) question. Most items describe a performance claim and ask whether it violates the Standard.

1Identify what is being communicated: returns, track record, benchmark comparison, or a GIPS claim.
2Ask if it is fair: is the benchmark appropriate, and are periods and accounts chosen without cherry-picking?
3Ask if it is accurate: are the numbers correct, labeled gross or net, and free from exaggeration or guarantees?
4Ask if it is complete: are material facts omitted, such as losing accounts, short history, or fees?
5Check for GIPS claims. If the firm says it is compliant, is it fully compliant? Partial claims are violations.
6Check whose record it is. Prior-firm track records need proper support and attribution.
7Choose the option that corrects the misleading item or shows reasonable effort, and eliminate the other two.

Quickest way: Fair, accurate, complete scan

When to use it: Use when you have about 90 seconds and the stem describes a performance claim or marketing statement.

Find the single most misleading detail: a benchmark, omitted period, unlabeled gross return, a guarantee, or a partial GIPS claim.
Match it to fair, accurate or complete.
If the stem mentions GIPS, remember: voluntary, but claims must be exact.
Pick the option that discloses or fixes the problem. Reject options that say GIPS is required or that tell the client to figure it out.

Common mistakes in Performance Presentation

Thinking III(D) requires GIPS compliance.
Both topics concern performance presentation, so they blur together.
Fix: Remember GIPS is voluntary. III(D) applies to everyone, but a GIPS claim must be fully accurate.
Treating accurate numbers as enough.
Candidates focus on arithmetic and ignore selective presentation.
Fix: Check all three tests. Correct figures can still be unfair or incomplete if bad periods or accounts are omitted.
Treating a guarantee of future returns as a core Standard III(D) breach.
Guarantees are about performance, so they seem to belong with performance presentation.
Fix: Guaranteeing investment returns is mainly a Standard I(C) Misrepresentation issue. Standard III(D) asks whether the performance information you communicate is fair, accurate, and complete.
Allowing partial GIPS compliance claims.
It seems honest to say 'mostly compliant'.
Fix: Under GIPS, you either claim full compliance or you do not claim it. Partial claims are misleading.
Ignoring the 'reasonable efforts' wording and assuming strict liability.
Candidates read the standard as perfection.
Fix: The duty is reasonable effort. Using a third party's figures is acceptable if you checked them reasonably, but not if you ignored obvious problems.

Worked examples

Example 1

An analyst at an asset manager prepares a brochure for prospects. It shows the five-year return of the firm's best-performing equity account, labeled as 'typical results'. The firm's other comparable accounts earned much less. Which action is most consistent with Standard III(D)? A. Keep the brochure, since the return figure is correctly calculated. B. Present composite performance for all comparable accounts. C. Keep the brochure but add 'past performance is not a guarantee'.

Show the solution

Identify the claim: one account presented as typical.
Fair test: selecting the best account is cherry-picking, so it is unfair and incomplete.
Option A fails because correct arithmetic does not cure selective presentation.
Option C fails because a disclaimer about the future does not fix a misleading description of the past.
Option B shows all comparable accounts, which makes the information fair, accurate and complete.

Answer: B. Present composite performance for all comparable accounts.

Example 2

A portfolio manager's marketing deck states: 'Our firm is GIPS compliant except for the treatment of one legacy account.' Under the CFA Standards, this statement most likely: A. is acceptable because GIPS compliance is voluntary. B. violates Standard III(D) because partial compliance claims are misleading. C. is acceptable if the exception is explained orally.

Show the solution

Recall that GIPS is voluntary, but a firm that claims compliance must meet all requirements.
Partial compliance claims are not permitted. The wording implies compliance that does not exist.
Option A confuses voluntary adoption with freedom to make partial claims.
Option C fails because an oral explanation does not make a written claim accurate or complete.
So the statement is misleading and breaches the fair, accurate and complete requirement.

Answer: B. It violates Standard III(D) because partial compliance claims are misleading.

Exam tips

Memorize the three words: fair, accurate, complete. Most answers hinge on one of them.
If an option says GIPS compliance is mandatory under the Code and Standards, eliminate it.
Look for cherry-picking, wrong benchmark, unlabeled gross returns, guarantees, and partial GIPS claims. These are the usual traps.
The correct answer often adds disclosure or presents a composite. Options that only add a vague disclaimer are usually wrong.
Remember reasonable efforts: if the stem shows someone checked third-party data sensibly, that is usually compliant.

Practice questions from Guidance for Standard III: Duties to Clients

Performance Presentation in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Performance Presentation: frequently asked questions

What does Standard III(D) require?

It requires members and candidates to make reasonable efforts to ensure performance information they communicate is fair, accurate, and complete. It applies to current clients and prospects. It covers written and oral communication.

Is GIPS compliance required by Standard III(D)?

No. GIPS is voluntary and Standard III(D) does not require it. However, anyone who claims GIPS compliance must do so accurately, and a partial claim is misleading.

What is the difference between GIPS and Standard III(D)?

Standard III(D) is a mandatory ethical duty for all members and candidates presenting performance. GIPS is a voluntary set of detailed calculation and presentation standards for firms. Following GIPS helps meet III(D), but III(D) still applies if a firm does not use GIPS.

Which examples of misleading performance are commonly tested?

Common examples include showing only the best account as typical, choosing a benchmark that flatters results, omitting poor periods, not labeling gross returns, and claiming a prior employer's record without support. Guaranteeing future returns is mainly tested as a Standard I(C) misrepresentation.