A record 19,920 investment professionals quietly celebrated at their desk Tuesday morning when they received emails indicating they had passed the third and final level of the CFA, meaning they are a fairly simple verification step away from earning their charter. For the 44% who failed – along with the roughly 29k people who passed Level II – it will soon be time to start thinking about next year.
Like the other two exams, Level III will include some brand-new material in 2019. The CFA Institute gave us a sneak peek at the roughly 9,000 pages of curriculum. The good news for Level III candidates is that you won’t be facing any questions on fintech, cryptocurrencies and blockchain like those a step or two down the ladder. The bad news is that the new material is part of the infamously-difficult ethical portion of the test.
The new reading, covering the concept of professionalism, appears to have been added as a response to the ever-increasing scrutiny facing investment professionals – from the media, clients and the general public. The CFA Institute references a 2017 study that found “the largest-ever drop in trust across the institutions of government, business, media and non-governmental organizations," with financial services ranked as the least-trusted sector that was studied. To counter the current perception, firms likely pressed the CFA Institute to go beyond ethics to include material on acting like a professional.
Below are four practice questions on professionalism provided by the institute. On the surface, they don’t seem all that difficult, though the answers may not jump out at you. How would you fare? Click here for the answers along with a short explanation, or follow the link below the questions.
1. High ethical standards are distinguishing features of which of the following bodies?
A: Craft guilds
B: Trade bodies
C: Professional bodies
2. Fiduciary duty is a standard most likely to be upheld by members of a(n):
C: not-for-profit body.
3. To maintain trust, the investment management profession must be interdependent with:
C: investment firms.
4. When an ethical dilemma occurs, an investment professional should most likely first raise the issue with a:
A: mentor outside the firm.
B: professional body’s hotline.
C: senior individual in the firm.
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