Lesson 17 of 34 · All lessons in this module
- Standard I: ProfessionalismVideo lesson
- Standard I cases: knowledge of the law and dissociation
- Standard I cases: pressure on analysts and performance staff
- Standard I cases: gifts, travel, manager selection and paid research
- Standard I cases: misrepresenting services, products and results
- Standard I cases: plagiarism, third-party material and online content
- Standard I cases: misconduct and competence
- Standard II: Integrity of Capital MarketsVideo lesson
- Standard II(A) cases: material, nonpublic or mosaic?
- Standard II(A) cases: tipping, experts and firm controls
- Standard II(B) cases: rumours, trades and intent
- Standard II cases: extra 2026 examples and procedures
- Standard III(A)–(B): Loyalty, Prudence, Care and Fair DealingVideo lesson
- Standard III(A) cases: client identity, loyalty and brokerage
- Standard III(B) cases: dissemination, allocation and priority
- Standard III(C)–(E): Suitability, Performance Presentation and ConfidentialityVideo lesson
- Standard III(C) cases: IPS, total portfolio and mandates
- Standard III(D) cases: fair, accurate and complete performance
- Standard III(E) cases: exceptions, channels and firm limits
- Standard IV: Duties to EmployersVideo lesson
- Standard IV(A) cases: loyalty, outside work and leaving
- Standard IV(B) and IV(C) cases: outside pay and supervision
- Standard V: Investment Analysis, Recommendations, and ActionsVideo lesson
- Standard V(A) cases: reasonable basis and outside research
- Standard V(A) cases: models, advisers and providers
- Standard V(B) cases: services, costs and process changes
- Standard V(B) cases: risks, limitations, facts and opinions
- Standard V(C) cases: records and retention
- Standard VI: Conflicts of InterestVideo lesson
- Standard VI(A) cases: avoiding and disclosing conflicts
- Standard VI(B) and VI(C) cases: who trades first and who gets paid
- Standard VII: Responsibilities as a CFA Institute Member or CFA CandidateVideo lesson
- Standard VII(A) cases: exams, confidentiality and volunteering
- Standard VII(B) cases: using the designation, membership and candidacy
Lesson 17 of 34 · 16 min
Standard III(C) cases: IPS, total portfolio and mandates
Suitability is judged against the client's written objectives and constraints, across the whole portfolio, and only by those in an advisory relationship; a mandate manager answers to the mandate.
In short
- Before any recommendation or action, make a reasonable inquiry into experience, risk and return objectives and constraints. Recommending first and asking later is a breach.
- The IPS is the reference point: client identification, objectives, eight constraints and benchmarks. Judge each idea by its effect on the total portfolio.
- A risky holding can fit a portfolio, and a safe-looking one can fail the IPS (a lock-up fund in a liquid-assets mandate). Leverage and limited liquidity bear directly on suitability.
- Review the IPS at least annually and when something material changes: the client's wealth, family, health or liquidity, an institution's liabilities or withdrawals, or a requested change of strategy.
- Unsolicited unsuitable trade: pause, discuss, document. Small impact needs the client's acknowledgment; material impact needs an IPS update; an insistent client may force a decision about the relationship.
- Mandate managers owe consistency with the mandate. Execution-only staff and sell-side analysts may not judge suitability, and suitability can rest only on the information the client provided.
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