Lesson 4 of 6 · All lessons in this module
- How to work through an ethics caseVideo lesson
- Professionalism: law, independence, honesty and competence
- Markets and conflicts: inside information, manipulation, front-running and fees
- Duties to clients: loyalty, fair dealing, suitability, performance and confidentiality
- Duties to employers: loyalty, outside pay and supervision
- Research, communication, records and the CFA designation
Lesson 4 of 6 · 15 min
Duties to clients: loyalty, fair dealing, suitability, performance and confidentiality
Client cases ask whether the member put clients first within the relationship actually agreed, treated clients fairly, made only suitable recommendations, presented performance honestly and protected client data.
In short
- III(A) Loyalty, Prudence and Care: agreements cannot strip away core duties, but the scope of the duty depends on the relationship. An execution-only broker who follows agreed margin terms has not breached it.
- Charging clients: bill only genuine business costs, and choose the cheapest overall arrangement. Personal entertainment and change fees caused by other business are overhead.
- III(B) Fair Dealing: recommendation changes must reach all clients fairly; premium services are fine if available to all, disclosed and not harmful to other clients.
- III(C) Suitability: disclosure and tax benefits do not cure concentration plus leverage for modest, cautious clients. A client-requested change still needs a real suitability analysis.
- III(D) Performance Presentation: accurate numbers can still mislead; disclose when a track record comes from a predecessor vehicle. III(E) Confidentiality: staff must follow data rules, and compliance must design and test safeguards.
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