Standard 5: Investment Analysis, Recommendations, and Actions

Question 1

A. Dilligence and Reasonable Basis

Answer 1

• Exercise diligence, independence, and thoroughness in analyzing investments, making investment recommendations, and taking investment actions.
• Have a reasonable and adequate basis, supported by appropriate research and investigation, for any investment analysis, recommendation, or action.

Question 2

B. Communication with Clients and Prospective Clients

Answer 2

• Disclose the basic format and general principles of the investment processes you use to analyze investments, select securities, and construct portfolios. Disclose promptly disclose any changes that might materially affect those processes.
• Disclose to clients and prospective clients significant limitations and risks associated with the investment process
• Use reasonable judgment in identifying which factors are important to your investment analyses, recommendations, or actions and include those factors in communications with clients and prospective clients.
• Distinguish between fact and opinion in the presentation of investment analysis and recommendations.

Question 3

C. Record Retention

Answer 3

• Develop and maintain appropriate records to support their investment analyses, recommendations, actions, and other investment-related communications with clients and prospective clients.