Determining Client Suitability in Investment Recommendations

Hard Cfa Institute Code And Standards Duties - Suitability

As a financial analyst working with a diverse client base, you are tasked with developing investment strategies tailored to the individual needs and financial situations of your clients. Recently, one of your clients expressed interest in a high-risk investment opportunity. However, this client is nearing retirement and has a conservative risk tolerance and a need for liquidity. As you consider your advice, which of the following actions best aligns with the CFA Institute Code of Ethics and Standards of Professional Conduct regarding suitability?

Recommend the high-risk investment as it could yield higher returns, ignoring the client’s risk tolerance.

Guide the client towards a diversified portfolio that incorporates some high-risk investments, reflecting their interest while prioritizing their risk tolerance.

Advise the client against any high-risk investments, suggesting only low-risk options despite the client’s expressed interest.

Hint

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