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IBBC CAPITAL ACADEMY / 2027

Reasonable research, clear costs and retained evidence

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 diligence using mechanisms and limitations.
  • Explain communication using mechanisms and limitations.
  • Explain evidence retention using mechanisms and limitations.

Draft · approximately 25 minutes, excluding further revision.

Diligence

A recommendation needs a reasonable, diligent basis supported by suitable research; pressure to publish does not replace checking data, methods and major assumptions.

Third-party research and automated outputs require due diligence appropriate to their use; outsourcing a calculation does not outsource the professional responsibility for relying on it.

Communication

Communicate service nature and client costs in understandable terms, including the relevant fee basis; precise future currency amounts may not be knowable in advance.

Explain process principles, significant limitations and risks, and material changes; distinguish observations from judgments instead of presenting a forecast as fact.

Evidence retention

Retain records supporting analysis, recommendations and communications in an appropriate accessible form under applicable law and policy; a memory of the reasoning is insufficient.

Correct material errors and update affected communications with a documented trail; silently overwriting the model can conceal what clients originally received.

Formula and assumptions

Research chain: sources → methods → reasonable basis → clear communication → retained record

Original applied case: Reasonable research, clear costs and retained evidence

  1. A fictional analyst finds a source used percentage points as decimals, overstating a duration loss by 100 times.
  2. Recompute, check affected recommendations and notify relevant recipients with the corrected assumption and effect.
  3. Retain original and corrected versions with the decision record; a good final number does not erase the communication obligation.

Errors to catch

  • Do not assume: Publication pressure eliminates the need for a reasonable basis.
  • Do not assume: AI-generated text needs no analyst review.
  • Do not assume: Clients never need to know fee bases.

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.