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

An analyst at a firm can recommend only the firm's proprietary funds. Which action is most consistent with Standard III(A)?

The analyst should inform clients at the outset that advice is limited to proprietary products and then recommend the allowable products consistent with each client's objectives and risk tolerance, disregarding firm or personal interest. Hiding the limitation or favoring higher fees would breach the duty of loyalty.

  1. ATell clients at the outset that advice is limited to proprietary products and recommend the allowable products that fit each client's objectives and risk toleranceCorrect
  2. BRecommend the proprietary fund that earns the firm the highest fee, since only proprietary funds are allowed
  3. CAvoid mentioning the limitation because clients rely on the analyst's skill rather than the product range

Explanation

In a blended environment the extent and limits of the advice should be outlined at the outset so clients can look elsewhere for a wider range. Within the allowable products, the member recommends those consistent with the client's objectives and risk tolerances and disregards firm or personal interests. The other options let firm interest drive the recommendation or conceal the limitation.

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