Lesson 6 of 8 · 15 min
Standard V: Investment Analysis, Recommendations, and Actions
Do the homework before you recommend, tell clients clearly what you do, what it costs and what could go wrong, and keep the records that prove it.
In short
- V(A) Diligence and Reasonable Basis: be diligent, independent and thorough, and have a reasonable and adequate basis supported by research for every recommendation or action.
- Third-party research, quantitative models and external managers may be used, but only after reasonable checks; you must understand a model's assumptions and limits.
- V(B) Communication with Clients: disclose the nature and cost of services, the basic investment process and material changes to it, significant risks and limitations, the important factors, and separate fact from opinion.
- V(C) Record Retention: keep records that support your analysis, recommendations and client communications. They belong to the firm. Without other rules, keep them at least seven years.
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