Lesson 4 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 4 of 7 · 16 min
Standard V(B) cases: services, costs and process changes
Tell clients what you do, what it costs and how you invest, and tell them again, promptly, whenever any of those change in a way a client could care about.
In short
- This lesson covers the first two V(B) duties: nature of services and costs, and the investment process with prompt notice of material changes.
- Cost disclosure is what the client pays, including affiliates' and third parties' charges; exact amounts and the firm's own costs are not required, and client sophistication is no excuse.
- Disclosure is ongoing: when services, costs or the fee method change, tell affected clients, even when the change lowers fees.
- Materiality test: would a client who chose you for a specific style, role, constraint or team see the change as altering what they bought? If so, tell existing clients, not only prospects.
- Best practice is to set terms out in writing at the outset; if firm-issued disclosures fall short, supplement them, raise it, and dissociate if it cannot be fixed.
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