Standard 3: Duties to Clients

Question 1

A. Loyalty, Prudence, and Care

Answer 1

• Duty of loyalty to clients
• Act with reasonable care and exercise prudent judgment.
• Act for the benefit of their clients
• Place their clients’ interests before their employer’s or their own interests.

Question 2

B. Fair Dealing

Answer 2

• Deal fairly and objectively with all clients when providing investment analysis, making investment recommendations, taking investment action, or engaging in other professional activities.

Question 3

C. Suitability

Answer 3

When in an advisory relationship with a client:

• Make a reasonable inquiry into a client’s or prospective client’s investment experience, risk and return objectives, and financial constraints prior to making any investment recommendation or taking investment action
• Reassess and update this information regularly.
• Determine that an investment is suitable to the client’s financial situation and consistent with the client’s written objectives, mandates, and constraints before making an investment recommendation or taking investment action
• Judge the suitability of investments in the context of the client’s total portfolio.

When responsible for managing a portfolio to a specific mandate, strategy, or style, make recommendations or take actions that are consistent with the stated objectives and constraints of the portfolio.

Question 4

D. Performance Presentation

Answer 4

• Make reasonable efforts to ensure that investment performance information is fair, accurate, and complete

Question 5

E. Preservation of Confidentiality

Answer 5

Keep information about current, former, and prospective clients confidential unless:

• The information concerns illegal activities on the part of the client or prospective client,
• Disclosure is required by law, or
• The client or prospective client permits disclosure