Skip to content

CFA Level I Exam · Guidance for Standard VI: Conflicts of Interest

Standard VI(A): Avoid or Disclose Conflicts of Interest

Updated 7 October 2026 · Fact-checked

Standard VI(A) requires Members and Candidates to make full and fair disclosure of all matters that could reasonably be expected to impair their independence and objectivity or interfere with their duties to clients, prospective clients and employers. Disclosures must be prominent, delivered in plain language and communicated in a way that clearly conveys the conflict. Where possible, avoid the conflict.

Understand Standard VI(A): Avoid or Disclose Conflicts

A conflict of interest arises when your own interests, or those of your firm, could pull against what you owe to a client or employer. The conflict itself is not always a violation. Failing to handle it properly is.

Standard VI(A) says Members and Candidates must make full and fair disclosure of all matters that could reasonably be expected to impair their independence and objectivity or interfere with respective duties to their clients, prospective clients and employer. They must ensure that disclosures are prominent, are delivered in plain language and communicate the relevant information effectively.

The idea is simple. Clients and employers can only judge your advice if they know about anything that might bias it. Disclosure gives them that information. If a conflict is so serious that disclosure cannot fix it, you should avoid it altogether.

The Standard covers three groups: clients, prospective clients and your employer. Typical conflicts include owning shares in a company you recommend, your firm having an investment banking relationship with the issuer you cover, receiving gifts, board seats, and compensation tied to the products you sell. Disclosure must be clear and prominent. Burying a line in fine print does not meet the Standard.

This Standard links closely to I(B) Independence and Objectivity (especially gifts and influence from issuers), IV(B) Additional Compensation Arrangements, and VI(B) Priority of Transactions. VI(A) is the general rule; the others deal with specific situations.

Key formulas to remember

Core duty of Standard VI(A)
Conflict that could impair independence/objectivity or interfere with duties → avoid it, or make full and fair disclosure
Disclosure is owed to clients, prospective clients and the employer, as relevant.
Quality of disclosure
Disclosure must be prominent + in plain language + communicate the relevant information effectively
Technical or hidden wording does not satisfy the Standard.
Test for what to disclose
Matters that could reasonably be expected to impair independence and objectivity or interfere with duties
Think of how a reasonable client or employer would see it, not only how you see it.
Disclosure to employers
Disclose to the employer: beneficial ownership of securities, board service, and other potential conflicts
Give enough detail for the employer to decide how to manage the conflict, ideally in writing.
Disclosure to clients
Disclose: broker or firm referral arrangements, ownership in recommended securities, and the firm's business relationships with covered issuers
Clients need this to judge the objectivity of advice.

How to solve Standard VI(A): Avoid or Disclose Conflicts questions

Use this method for any VI(A) question. The answer is almost always some form of disclose, or avoid, and do it clearly.

  1. 1Identify the conflict: what interest of the member or firm could bias advice or compete with duties?
  2. 2Decide who is affected: client, prospective client, employer, or more than one.
  3. 3Ask whether the conflict could reasonably be expected to impair independence and objectivity or interfere with duties. If yes, VI(A) applies.
  4. 4Check what the member did: nothing, partial disclosure, or full and fair disclosure.
  5. 5Check the quality of the disclosure: is it prominent, in plain language and understandable?
  6. 6Choose the option that avoids the conflict or discloses it fully to the right party. Reject options that hide it, disclose only to one party, or rely on the conflict being small.
  7. 7Check for a related Standard (I(B), IV(B), VI(B), VI(C)) only if the facts point to it.

Quickest way: Disclose clearly, to the right people

When to use it: Use when you have about 90 seconds and the options differ in whether and how the conflict is handled.

  1. Spot the conflict in the stem.
  2. Eliminate any option that says to do nothing or keep it quiet.
  3. Eliminate options that disclose only vaguely, in fine print, or only to some of the affected parties.
  4. Pick the option with full, prominent, plain-language disclosure to clients and/or the employer, or that avoids the conflict.
  5. If two options both disclose, prefer the one that is more complete and more prominent.

Common mistakes in Standard VI(A): Avoid or Disclose Conflicts

  • Thinking a conflict of interest is itself a violation.

    The word conflict sounds like wrongdoing.

    Fix: The violation is failing to avoid or disclose it properly. A properly disclosed conflict can be acceptable.

  • Choosing an answer that discloses only to the employer when clients are affected (or the reverse).

    Students stop at the first correct-looking party.

    Fix: Identify every party whose interests or decisions are affected. Disclosure may be owed to clients, prospective clients and the employer.

  • Accepting small-print or technical disclosure as enough.

    Any disclosure sounds like compliance.

    Fix: The Standard requires disclosures to be prominent, in plain language and effective at communicating the information.

  • Assuming a small or immaterial-looking conflict needs no disclosure.

    Students judge from their own view of how biased they are.

    Fix: The test is whether the matter could reasonably be expected to impair independence and objectivity or interfere with duties, as a reasonable client or employer would see it.

  • Mixing VI(A) with VI(B) or VI(C).

    All three are conflict Standards.

    Fix: VI(A) is the general avoid-or-disclose duty. VI(B) requires that transactions for clients and employers have priority over transactions for the member's own benefit. VI(C) covers disclosure of referral fees.

Worked examples

Example 1

An analyst at an asset manager covers a listed manufacturer. The analyst personally owns a significant number of its shares. She plans to publish a Buy recommendation. Which action best complies with Standard VI(A)?
A. Publish the report and say nothing, because her view is well researched
B. Publish the report with a prominent, plain-language disclosure of her share ownership
C. Disclose the ownership only to her manager and not in the report

Show the solution
  1. The conflict: her personal holding could bias the recommendation, so it could impair independence and objectivity.
  2. Affected parties: the readers and clients who rely on the report, and her employer.
  3. Option A hides the conflict. Eliminate it.
  4. Option C discloses only to the employer. The clients who rely on the recommendation do not learn of the conflict. Eliminate it.
  5. Option B gives full, prominent and plain-language disclosure to the people relying on the report.

Answer: B

Example 2

A portfolio manager is invited to join the board of a company whose shares are held in client portfolios. The role would not stop him doing his job. Under Standard VI(A), what should he do?
A. Accept the seat and tell no one, because there is no effect on his work
B. Decline silently, because any board seat breaches the Standards
C. Disclose the possible conflict to his employer before deciding, so it can be assessed and managed

Show the solution
  1. Board service could affect independence and objectivity toward the company, so it is a potential conflict.
  2. Standard VI(A) does not forbid it outright. It requires avoiding or disclosing the conflict.
  3. Option A conceals it and relies on his own view that there is no effect. Eliminate it.
  4. Option B overstates the rule: a board seat is not automatically a breach.
  5. Option C discloses to the employer so the conflict can be judged and managed, and, where relevant, to clients.

Answer: C

Exam tips

  • Read the stem for who is affected. The right answer usually names the correct party for disclosure.
  • Prefer answers that say disclose clearly and prominently. Reject silence and fine print.
  • Do not pick an option just because it says avoid. The Standard allows disclosure when the conflict can be managed.
  • Watch for look-alike Standards: I(B) for gifts and influence, IV(B) for extra pay from others, VI(B) for personal trading, VI(C) for referral fees.
  • With three options and no penalty for a wrong answer, always answer. Eliminating the silent option usually leaves two choices.

Practice questions from Guidance for Standard VI: Conflicts of Interest

Standard VI(A): Avoid or Disclose Conflicts in other exams

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

Standard VI(A): Avoid or Disclose Conflicts: frequently asked questions

What does Standard VI(A) require?

It requires Members and Candidates to make full and fair disclosure of all matters that could reasonably be expected to impair their independence and objectivity or interfere with duties to clients, prospective clients and employers. Disclosures must be prominent, in plain language and effective in communicating the information.

Is every conflict of interest a violation of the Standards?

No. The violation is failing to avoid or properly disclose the conflict. A conflict that is fully and clearly disclosed to the right parties can be consistent with the Standard.

Who must receive the disclosure under VI(A)?

Disclosure goes to those whose interests may be affected: clients, prospective clients and the employer. Read the facts to see which of them is exposed to the conflict.

What makes a disclosure good enough?

It must be prominent, written in plain language and clear enough that the reader understands the conflict. Vague, technical or hidden wording does not meet the Standard.