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CFA Level III · Level III Core

Guidance for Standard I: Professionalism for CFA Level III

Standard I: Professionalism has five parts: knowledge of the law, independence and objectivity, misrepresentation, misconduct and competence. You solve a case by finding the facts, naming the standard breached or met, and stating the action that complies. Always apply the stricter of law and the Code and Standards.

What this chapter covers

Standard I is the first of seven standards in the CFA Institute Code and Standards. It covers how you behave as a professional: what law you follow, how you keep your judgment free, how you describe your work, how you conduct yourself, and whether you are fit for the task. The chapter walks through each sub-standard with the text, guidance, recommended procedures for compliance, and application examples.

At Level III, Ethics is tested through item sets and essay sets that present realistic situations. You rarely recite a rule. You read a vignette, decide whether a violation occurred, name the standard, and say what the member should do. Standard I cases often involve conflicts between local law and the Code, gifts and pressure from issuers or clients, misleading marketing, and members acting outside their skills.

This chapter links to the rest of the Ethics block and to GIPS. Misrepresentation in Standard I(C) overlaps with performance presentation. Independence in I(B) connects to conflicts of interest in Standard VI. Competence in I(E) supports the duties to clients in Standard III. Learn Standard I well and the other standards feel like extensions of the same reasoning.

Ethical and Professional Standards carries 10-15% of the topic weight. Ethics questions appear as item sets and essay sets across the exam, not as one separate block. The same reasoning repeats from case to case. Standard I is the base for the rest of the Code. Candidates who can name the correct standard and the compliant action quickly protect 3-point multiple-choice items and earn essay points that rely on precise wording. There is no minimum passing score per topic, so your overall score decides the result.

Guidance for Standard I: Professionalism: topics in the order to study them

  1. 1Standard I(A) Knowledge of the LawIt sets the basic rule, follow the stricter of law and the Code, which you apply in every later standard.
  2. 2Standard I(B) Independence and ObjectivityIt is the most case-heavy part, covering gifts, compensation and issuer pressure, so give it the most time while your attention is fresh.
  3. 3Standard I(C) MisrepresentationIt covers false or misleading statements and plagiarism, and it links to performance presentation and GIPS, so it comes once the basics are in place.
  4. 4Standard I(D) MisconductIt is short and covers dishonest or deceitful conduct that reflects on your integrity, so it is easy to compare with I(C) right after.
  5. 5Standard I(E) CompetenceIt builds on the earlier standards, so it is easier once you know what a violation looks like. Use the current curriculum text for its exact wording.
  6. 6Summary of Changes in the Current Edition of the Code and StandardsReview it last, because you need the standards in mind to see what changed and why.

How to prepare Guidance for Standard I: Professionalism

Treat this chapter as a skill, not a memory task. You need the rule text, but marks come from applying it to facts.

  1. Read the text of each sub-standard once, then restate it in your own words in one or two lines.
  2. For each sub-standard, list the typical violations and the recommended compliance procedures from the reading.
  3. Work application examples without looking at the answer. Decide: violation or not, which standard, and what the member should do.
  4. Practise essay answers. Use the command word, name the standard, give the reason in one sentence, and state the action. Stop once you have answered what was asked.
  5. Compare similar standards side by side, such as I(C) and I(D), or I(B) and Standard VI, and write down what separates them.
  6. Revisit the changes in the current edition after finishing, and check that your notes match the current text.
  7. Do mixed Ethics item sets under time limits, and review each wrong answer by naming the fact you missed.

Common mistakes in Guidance for Standard I: Professionalism

  • Citing the wrong sub-standard for the facts

    Fix: Ask what the core problem is: a false statement (I(C)), dishonest personal conduct (I(D)), compromised judgment (I(B)), or an undisclosed conflict (VI).

  • Following local law when it is weaker than the Code

    Fix: Remember the stricter rule applies. If the law is looser than the Code, follow the Code, and if the law is stricter, follow the law.

  • Writing long essay answers with extra points

    Fix: Respond to the command word, give the reason in one sentence, and state the action. Extra material earns nothing and costs time.

  • Treating all gifts as violations or all gifts as fine

    Fix: Ask whether the gift could reasonably impair objectivity, and whether it was disclosed to your employer.

  • Choosing an answer that is true but not the required action

    Fix: Pick the action that the Code and recommended procedures support, such as disclosure, dissociation or seeking help, and rule out the others.

  • Ignoring the changes in the current edition of the Code and Standards

    Fix: Check your notes against the current curriculum text and update any wording that has changed.

Last-day revision: Guidance for Standard I: Professionalism

  • I(A): when law and the Code differ, follow the stricter one.
  • I(A): if you know of a violation by others, dissociate yourself from it, and consider reporting where appropriate.
  • I(B): use reasonable care and judgment to keep independence and objectivity in your work.
  • I(B): modest gifts may be acceptable if disclosed, but gifts that could compromise objectivity are a risk.
  • I(B): be careful with issuer-paid research and compensation tied to the outcome of a recommendation.
  • I(C): do not knowingly make false or misleading statements about your services, qualifications or investments.
  • I(C): using others' work without credit is plagiarism and a violation.
  • I(D): do not engage in conduct involving dishonesty, fraud or deceit, or conduct that reflects poorly on your integrity or professional reputation.
  • I(E): do not claim skills you lack; get help or decline work outside your competence.
  • For each case, find the facts, name the standard, and state the compliant action.
  • Answer only what the command word asks, and give the number of responses requested.
  • Check the changes in the current edition of the Code and Standards against your notes before the exam.

Guidance for Standard I: Professionalism in other exams

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

Guidance for Standard I: Professionalism: frequently asked questions

What are the five parts of Standard I?

They are Knowledge of the Law, Independence and Objectivity, Misrepresentation, Misconduct and Competence. Together they cover how you follow the law, keep your judgment free, describe your work honestly, behave with integrity and work within your skills.

How is Standard I tested at Level III?

It appears in the Ethics portion as item sets and essay sets. You read a case, decide whether the member complied, name the standard, and state the action to take. Each item-set question is worth 3 points.

What is the difference between I(C) Misrepresentation and I(D) Misconduct?

I(C) is about false or misleading statements related to your work, services or qualifications, including plagiarism. I(D) is broader and covers dishonest, fraudulent or deceitful conduct, or conduct that harms your integrity or reputation.

What if local law is less strict than the Code?

Follow the Code. Under I(A) you comply with the stricter of applicable law and the Code and Standards. If local law is stricter, you follow the law.

Do I need to memorize the changes in the current edition separately?

Study them after the standards, and make sure your notes reflect the current text. Treat them as part of the standards rather than a separate list, because cases are tested on the current wording.