CFA Level 1
Ethical and Professional Standards

Understanding Duties of Suitability in Investment Recommendations

Easy Cfa Institute Code And Standards Duties - Suitability

John is a financial advisor who is working with a new client, Sarah. During their initial meeting, Sarah expresses a desire for aggressive growth in her investment portfolio. She mentions that she is comfortable with high volatility and is primarily focused on maximizing her returns for retirement, which is still 20 years away.

After assessing Sarah's financial situation and risk tolerance, John presents her with two investment strategies. Solution A involves a portfolio that heavily invests in high-growth technology stocks with high volatility. Solution B suggests a more balanced portfolio that includes bonds and dividend-paying stocks, which would provide some stability.

Which of the following actions should John take in accordance with his ethical duties under the CFA Institute Code and Standards?

Hint

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