Would appreciate it if someone can clear this to me…
Deviation from the IPS isn’t allowed even if I explain to the client the investment’s unsuitability, yet he insists and provides a written consent to go ahead with the unsuitable investment? So I should just decline his request?!
Somewhere in schweser it mentions that a material deviation “in the absence of approval from clients” is a violation to suitability
thanks!
Yea, I think the client can demand you deviate from the IPS, and you must do so. It is the client’s money, after all. You should probably try to provide resolution, if it is appropriate, like if the client is trying to take too much risk. I assume you’d probably need to get it in writing too, otherwise the PM may be liable and in deep sh** if things go wrong. However, the PM must never deviate from the IPS under their own volition.
There is a question among the EOC of the first Ethics chapter… which its right answer says that the PM shouldn’t buy bonds for a porfolio as requested by clients since it is inconsistent with the portfolio’s investment mandate (the fund is prohibited from using leverage) even though all fund investors asked the PM to buy them.
OK, thanks.
So, what’s the question then?
Your first post says that the PM should do what the client wants, the answer of schweser EOC question says that even if the client asks the PM to do it, he’s not supposed to buy the bonds.
double clicked post.
But you’re answering your own question. What more do you want from posters on this forum? My feedback was apparently incorrect, and I’ve learned something. You want someone to clarify a qualitative statement from Schweser? It seems easy to understand to me.
Because somewhere else in schweser it mentions that a material deviation “in the absence of approval from clients” is a violation to suitability.
Because somewhere else in schweser it mentions that a material deviation “in the absence of approval from clients” is a violation to suitability.