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Ethics Is Important

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CFA Exam Prep

Core to the mission of CFA Institute is promoting high standards of ethics, integrity, and professional excellence. Those pursuing their charter are introduced to this early, as committing to the CFA Institute Code of Ethics and Standards of Professional Conduct is a requirement to enter the program. Furthermore, CFA Institute warns that this commitment should not be taken lightly.

That’s good advice.

The CFA curriculum emphasizes ethics at all three levels. Doing well on this section of the exam can be the difference between a passing and a failing mark.

To get a better idea of the role of ethics in the CFA curriculum and how candidates should approach studying this topic, I spoke to Loren Walden, CFA, an ethics instructor in San Francisco.


The Standards of Practice Handbook (10th edition) is the ethics bible for the curriculum. It was revised in 2010 primarily to address changes relating “to the growing diversity of CFA Institute membership and CFA Candidate base” (CFA Program Curriculum, volume 1, page 7). Walden points out though that “the curriculum has remained largely unchanged fundamentally, with only nuanced updates and adaptations to the Code to [give it] a broader global context. In a global marketplace there are occasional circumstances with regard to local law and potential conflicts with the code and standards. However, in general, the concept behind ethical conduct exists without borders.”


While “new challenges will continually arise for members and candidates in applying the Code and Standards” (CFA Program Curriculum, volume 1, page 13), Walden asserts that the ethics exam material is not vague.

“The subject matter is straightforward and unambiguous. It may not seem that way to someone reading the material and questions for the first time, but it is. There are rules, procedures, and lists of right conduct and action that must be memorized for the exam.”


Walden believes that “key to preparation for the ethics portion of the exam is repeated exposure to the material so that it becomes familiar. That familiarity will enable the candidate to pass.” He advises candidates to create flash cards that contain key concepts and applications for each standard. He also advises candidates to take as many practice exams as possible to become familiar with the material.


Different Study Approaches for Different Exam Levels?

When asked if this advice applies to all three levels, Walden responded that “at level III, the candidate is often assumed to be at the supervisory level. The focus [is] more on the application of the Code and Standards. The material itself can be more case-driven from a supervisor’s perspective rather than at level I, where the material is more rote memorization of key concepts.” He continues, “the study approach [at level III] is really not that different, but after seeing the material for at least two years, the candidate has an understanding of what constitutes an affirmative defense and best practice in various situations.”


While the exam material is straightforward, Walden acknowledges that it may be difficult for some candidates and charterholders to fully embrace ethical conduct mandated by CFA Institute. But remember the warning: Do not take this commitment lightly. Ethics is important!

For more study tips, read "Two Ways to Take Studying for the CFA Exam to the Next Level".

Loren Walden, CFA, is a founding partner at Blue Oak Capital, LLC, an investment advisory in Palo Alto, CA. He is an adjunct professor in Ethics for Finance at the University of San Francisco’s Masters of Financial Analysis Program and has taught the ethics section in a CFA Review program since 2000.

–Linda Lam

Linda Lam has worked with a candidate review program since 2000.

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That is a very good and necessary instruction, I must say. I also strongly believe that Ethics is important for a company to follow as it gives a sense of responsibility and commitment to its employees.

Thank you Yearbook Publishers for your thoughtful comment.

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