Suitability in Portfolio Management

Medium Cfa Institute Code And Standards Duties - Suitability

As a financial analyst at a wealth management firm, you are tasked with creating an investment portfolio for a new client, Mr. Thomas, who has shared his financial objectives and risk tolerance with you. Mr. Thomas is 50 years old, planning to retire at 65, and expressed a moderate risk tolerance, emphasizing the importance of having a balanced portfolio that grows but also preserves capital.

In developing this portfolio, which of the following actions best reflects your duty of suitability under the CFA Institute Code and Standards?

Investing heavily in high-yield speculative equities to maximize short-term gains.

Creating a diversified portfolio comprising a mix of stocks, bonds, and alternative investments tailored to Mr. Thomas's risk tolerance and retirement timeline.

Advising Mr. Thomas to invest primarily in government bonds for safety, ignoring his growth objectives.

Hint

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% Correct56%