The Code of Ethics contains six components. They are not ranked, each carries independent weight.
Integrity means truthfulness, transparency, and completeness in all professional dealings. You are not simply required to avoid lying. You must ensure clients and the public receive information that is accurate, complete, and presented clearly. An analyst who publishes a report emphasizing revenue growth while burying the fact that margins collapsed has violated the integrity component even though every stated fact is technically accurate.
HIGH-FREQUENCY: When the vignette describes dishonest or misleading communication, start with integrity. When it describes a knowledge gap, start with competence. When it describes self-dealing, start with client interests above personal interests.
Professionalism requires you to act in a way that upholds the reputation of the CFA designation. Deceptive marketing, fabricated credentials, or behavior that brings disrepute to the profession triggers this component even if no specific client is harmed.
Competence operates on two levels. First, you must possess the knowledge and skills necessary for your current responsibilities.
Common mistakes
- Treating the six components as interchangeable. Each addresses a different dimension. Misrepresentation maps to integrity, not professionalism. A knowledge gap maps to competence. Precision in matching facts to components separates correct answers from distractors. Trap: "The PM violated the professionalism component by misrepresenting performance." Wrong primary, misrepresentation maps to integrity.
- Confusing Code with Standards. When the question asks about the "Code of Ethics," answer at the component level. When it asks about "Standard I(A)," answer at the rule level. Trap: "Morton violated Standard I(C), Misrepresentation." May be true at the Standard level, but if the question asks about the Code, reference the integrity component.
- Assuming only clients can file complaints. Anyone can file. No financial loss is required. Trap: "Only clients harmed by the conduct may file a complaint with CFA Institute."
Bottom line
- Six components: integrity, professionalism, competence, client/profession above personal interests, dignity and respect, and ethical practice reflecting credit on the profession
- Each component is independently significant; violating any one constitutes a breach regardless of compliance with the others
- Integrity is active: communications must be accurate AND complete, and misleading by omission violates it
- Competence operates on two levels: a baseline for your current role and an ongoing obligation to improve
Exam shortcut
When a vignette implicates three components, ask: "What is the most direct harm, and which component addresses that harm most precisely?" Misleading communication = integrity. Knowledge gap = competence. Self-dealing = client interests above personal. Retaliation or intimidation = dignity and respect. Personal fraud = catch-all. Remember "PC-PS-S-R" for sanctions: Private Censure, Public Censure, Suspension, Revocation. Escalating severity. No monetary fines, that power belongs to securities regulators.
The full lesson (about 1,976 words, 13 min read) adds 2 worked examples, all 5 common mistakes, a self-check, free in the app.
Learning objectives
- code of ethics
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