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CFA Level I · CFA Level I Exam · Guidance for Standard V: Investment Analysis, Recommendations, and Actions

A new adviser meets a prospective client and describes the firm's services. Which disclosure is most likely required under Standard V(B)?

The adviser must disclose the nature of the services provided and the costs to the client associated with them. Standard V(B) requires this, together with the basic format of the investment process and its significant limitations and risks. Other clients' holdings and loss guarantees are not part of required disclosure.

  1. AThe nature of the services provided and the costs to the client associated with them.Correct
  2. BThe names and holdings of other clients with similar objectives.
  3. CA guarantee that the investment process will limit losses in falling markets.

Explanation

Standard V(B) requires disclosure of the nature of services and the associated costs, along with the process and its significant limitations and risks. Other clients' holdings are confidential and not required. A guarantee against losses contradicts the duty to disclose limitations and risks.

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