A client’s risk profile has not been updated in more than two years, yet the advisor seeks to increase the client’s risk exposure. This action most clearly violates which CFA Standard?

• A. A III(A) Loyalty, Prudence, and Care
• B. B III(D) Performance Presentation
• C. C I(A) Knowledge of the Law
• D. D IV(A) Loyalty

Answer: (A)

The action tests understanding of acting with Loyalty, Prudence, and Care toward the client. Advisors must place the client’s interests first and exercise prudent judgment, which includes basing recommendations on up-to-date information about the client’s objectives, financial situation, and risk tolerance. If a client’s risk profile hasn’t been reviewed in more than two years, proposing an increase in risk exposure assumes current preferences that may no longer exist, and it could expose the client to unnecessary harm. Keeping risk recommendations aligned with an updated profile is a fundamental part of prudent, client-focused guidance. The other standards address different areas—how performance is presented, knowledge of applicable law, or loyalty to an employer—which don’t directly govern the obligation to keep a client’s risk profile current and tailor decisions accordingly.