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CFA Level I · CFA Level I Exam · Guidance for Standard IV: Duties to Employers

An analyst proposes to accept extra compensation from a client for services beyond his employer's arrangement. Under the Standards' compliance practices, the disclosure to the employer should most likely include:

The disclosure should state the nature of the additional compensation, its approximate amount, and the duration of the agreement. This lets the employer assess the arrangement and the true cost of the services, and the party offering the compensation should confirm the details.

  1. Aonly the fact that some compensation will be received
  2. Bthe nature of the compensation, its approximate amount, and the duration of the agreementCorrect
  3. Cthe client's investment objectives and account value

Explanation

Compliance practices state that disclosure should include the terms of the agreement: the nature of the compensation, its approximate amount, and the duration. A bare statement is insufficient, and client account details are not part of the stated content.

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