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CFA Level I · CFA Level I Exam · Guidance for Standard I: Professionalism

A portfolio manager's client, a family office, offers him a year-end cash bonus for strong performance. The client's compensation arrangement with the manager's firm already exists. Under Standard I(B), the manager should most appropriately:

He should disclose the offered bonus to his employer before accepting it. A client gift can be supplementary compensation, not an attempt to favor one client over others. Disclosure lets the employer independently judge whether his independence and objectivity could be affected.

  1. Adecline it, because any client gift compromises objectivity
  2. Bdisclose the offer to his employer before accepting the bonusCorrect
  3. Caccept it and disclose it only if other clients ask about it

Explanation

A gift from a client may be supplementary compensation rather than an attempt to influence him to the detriment of other clients. Before accepting such bonuses, members should disclose them to their employer, who then decides how far independence may be affected. If prior notice is impossible, disclosure must follow acceptance.

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