Standard III: Loyalty and Fair Dealing
About this episode
Standard III of the CFA Institute Code of Ethics and Standards of Professional Conduct, Duties to Clients, is a large area of the Ethics material, so this season gives it two episodes. Part one works through Loyalty, Prudence, and Care, and Fair Dealing. In a two host format, one host explains the material while the other plays a fictional exam candidate, and together they reason out loud through the idea the whole Standard is built on: the client comes first, ahead of your employer and ahead of yourself. Using fully fictional scenarios, they work the conflicts the exam is built around, to help you practice reasoning through a vignette rather than guessing at it.
In this episode
Standard III, Duties to Clients, is a large area of the Ethics material, and this first of two episodes covers its opening sub-standards using fully fictional scenarios.
Standard III(A), Loyalty, Prudence, and Care, is built on a single idea: the client comes first, ahead of the employer and ahead of the professional. The hosts reason through what that means in practice, including acting for the benefit of clients and handling responsibilities like soft dollars and proxy voting with the client's interest in mind.
Standard III(B), Fair Dealing, addresses treating clients fairly when disseminating recommendations and taking investment action. A key distinction the episode works through is that fair does not mean identical: clients can be treated differently as long as no client is disadvantaged.
The fictional scenarios are used to surface the conflicts the exam is built around, where an action can look reasonable but quietly puts the professional or the firm ahead of the client.
The episode points listeners to the free 90 question practice exam at tottenprep.com.
What this episode covers
- Standard III(A) Loyalty, Prudence, and Care: the client comes first, ahead of your employer and ahead of yourself.
- Standard III(B) Fair Dealing: fair does not mean identical treatment across clients.
- The conflicts the exam is built around, worked through fictional advisor and client scenarios.
- Practicing how to reason through a vignette rather than guessing between two answers that both look defensible.
Frequently asked questions
What does CFA® Level I Ethics Standard III cover?
Standard III of the CFA Institute Code of Ethics and Standards of Professional Conduct covers Duties to Clients. This episode covers Part 1: Loyalty, Prudence, and Care (III-A) and Fair Dealing (III-B). The core idea is that the client comes first, ahead of your employer and ahead of yourself.
Where can I practice CFA® Level I questions for free?
There is a free 90 question practice exam at tottenprep.com.