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

An analyst works for a firm that offers only its own proprietary products. Which action is most consistent with Standard III(A) in this blended advisory environment?

The analyst should tell the client at the outset that advice is limited to proprietary products, then recommend the allowable products that fit the client's objectives and risk tolerance. Firm or personal interest must not motivate the recommended transaction.

  1. ARecommend only products from the wider market, even though the firm does not offer them
  2. BInform the client at the outset that advice is limited to the firm's proprietary products, then recommend allowable products consistent with the client's objectives and risk toleranceCorrect
  3. CRecommend the proprietary product with the highest firm margin, since the client was told the range is limited

Explanation

The guidance says the limits of advice should be outlined at the outset so clients can decide whether to engage. Within those limits, the member recommends allowable products consistent with the client's objectives and risk tolerances, disregarding firm or personal interest. Option C lets firm interest motivate the recommendation.

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