This module is part of the 2027 curriculum. You are following the 2026 curriculum, where it is not taught in this form. Switch if you are sitting the exam under the 2027 curriculum.
Lesson 1 of 2 · 15 min
Standard III(A)–(B): Loyalty, Prudence, Care and Fair Dealing
Clients come first, ahead of the employer and yourself, and every client gets a fair (not identical) chance at your recommendations and trades.
In short
- III(A) Loyalty, Prudence, and Care: act for the client's benefit, put client interests before your employer's and your own, and use the care and judgment of a prudent professional.
- Identify the real client: for a pension plan or trust it is the beneficiaries, not the sponsor or its management; for a fund it is the stated mandate.
- Client brokerage belongs to the client. Soft dollars may buy only research that benefits the client; client-directed brokerage is allowed, but still seek best execution.
- Proxies have economic value: vote them in an informed way, with a cost-benefit view, and disclose the voting policy.
- III(B) Fair Dealing: treat all clients fairly when disseminating recommendations and taking investment action. Fairly means no one is disadvantaged, not that everyone is treated identically.
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