Guidance for Standard V: Investment Analysis, Recommendations, and Actions

Standard V, Investment Analysis, Recommendations, and Actions: diligence and a reasonable basis, communicating clearly with clients, and keeping records.

1. 1. Standard V: Investment Analysis, Recommendations, and ActionsDo 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.Video · 6 minFree15 min
2. 2. Standard V(A) cases: reasonable basis and outside researchA 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.15 min
3. 3. Standard V(A) cases: models, advisers and providersModels and external managers are judged like securities: understand what they assume, test them before use, and never choose on a single feature such as fees, friendship or a demonstration.15 min
4. 4. Standard V(B) cases: services, costs and process changesTell 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.16 min
5. 5. Standard V(B) cases: risks, limitations, facts and opinionsSay what could go wrong, judged on what you knew at the time, include the factors that drive the conclusion, and label every forecast, estimate and model output as opinion.15 min
6. 6. Standard V(C) cases: records and retentionIf you cannot show what you looked at and why you acted, you cannot prove you were diligent: keep the support in whatever format it arrives, and remember it belongs to the firm.13 min
7. 7. Standard V cases: what the 2027 text addsThe 2027 guidance keeps the Standard V rules but states several duties as musts and adds a few: notify clients when risk characteristics change, follow up on changed recommendations, disclose methodology changes and know your retention rules.12 min