Lesson 2 of 7 · All lessons in this module
- 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 V cases: what the 2027 text adds
This lesson 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 2 of 7 · 15 min
Standard V(A) cases: reasonable basis and outside research
A recommendation stands on the work done before it, not on the result after it: ask what the basis was, whether it was still current when the client acted, and whose research you leaned on.
In short
- Ask first: what was the basis at the time? Time pressure, popular opinion, a friend's reputation or one overheard remark is not research.
- Then ask: was it still current? New facts that arrive before the client acts must be reflected in the report or recommendation.
- Judge the process, never the outcome: a thorough analysis that loses money complies; a lucky call with no basis violates.
- Outside research (a colleague's or a third party's) may be used after checking its assumptions, rigour, timeliness and objectivity; blogs and social media need the most review.
- In group work you may stay named on a conclusion you disagree with when the process was independent and had a reasonable basis.
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