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IBBC CAPITAL ACADEMY / 2027

Client duties across suitability and allocation

Independent IBBC Capital draft content for self-study. Not affiliated with or endorsed by CFA Institute. New lessons await subject-matter review. No CFA designation or official PSM credit is awarded.

Learning goals

  • Explain whose interest using mechanisms and limitations.
  • Explain portfolio suitability using mechanisms and limitations.
  • Explain fair treatment and privacy using mechanisms and limitations.

Draft · approximately 25 minutes, excluding further revision.

Whose interest

Identify the actual client and act loyally with prudent care in that client’s interests; a sponsor paying fees is not always the sole beneficiary of the investment duty.

Assess suitability using objectives, experience, financial circumstances and the total portfolio before an advisory recommendation; update the inquiry when circumstances materially change.

Portfolio suitability

A mandate-specific portfolio must stay consistent with its stated strategy and constraints; a manager cannot ignore the mandate because an unrelated trade looks attractive.

Fair dealing calls for equitable treatment in recommendations and allocations, not identical service to every client; disclosed service tiers still require a fair opportunity to act.

Fair treatment and privacy

Performance communication must be accurate and complete enough to avoid misleading clients; cherry-picking only successful accounts can distort the investment record.

Protect client confidentiality subject to applicable exceptions such as consent or legal requirements; secure systems and limited access support this continuing duty.

Formula and assumptions

Proportional allocation=available units×eligible requested units/total eligible requests

Original applied case: Client duties across suitability and allocation

  1. Three eligible clients request 60, 30 and 10 units in an oversubscribed issue; only 50 units are available and proportional allocation is the documented fair policy.
  2. Allocate 30, 15 and 5 under that explicit policy, subject to suitability and minimum-lot constraints.
  3. Do not put a personal or favored account first and allocate the remainder to others.

Errors to catch

  • Do not assume: The fee payer is always the only client beneficiary.
  • Do not assume: One attractive security is suitable regardless of the portfolio.
  • Do not assume: High expected return permits ignoring a mandate.

Original knowledge check

Answer every question before checking. Review explanations after submitting; retry starts a new attempt.

Sources and coverage status

These original lessons are drafts. Public outlines are used to check scope; the official learning-outcome text and proprietary question banks are not reproduced here. Follow the source for exam-year requirements and updates.