Chartered Financial Analyst (CFA) Ethics Practice Test

The key idea is that investment recommendations must be grounded in thorough analysis with a documented, reasonable basis. Standard V.A Diligence and Reasonable Basis requires members and candidates to base their recommendations on careful due diligence, using appropriate evidence and documentation to support the rationale. If there’s no documented evidence or rationale, the recommendation lacks the necessary basis and cannot be defended to clients or supervisors, which violates this standard.

This isn’t about how performance is presented, confidentiality, or whether a given investment is suitable for a client. Those areas are addressed by other standards. The absence of a documented justification directly points to failing the diligent, evidence-backed analysis that underpins every recommendation.