CFA Ethics: How to Study the 7 Standards of Conduct

Ethics looks like the easiest topic in the curriculum. There are no formulas, the reading is plain English, and most of the right answers sound like common sense. That is exactly why candidates under-prepare it. On exam day the questions are built so that two or three answers sound reasonable, and only one matches what the Standard actually requires.

How much Ethics is worth at each level

Level	Ethics weight	Format
Level 1 (2026 windows)	15–20%	Standalone multiple choice (about 27–36 of 180 questions)
Level 1 (February 2027 onwards)	10–15%	Standalone multiple choice (about 18–27 questions)
Level 2	10–15%	Item sets built around an ethics vignette
Level 3	10–15%	Part of the core, tested in item sets

Ethics also matters beyond its weight. When a candidate's result is close to the minimum passing score, CFA Institute considers Ethics performance in the final decision. We explain how that works in the CFA ethics adjustment.

The seven Standards at a glance

The Code of Ethics sets out broad principles. The Standards of Professional Conduct turn those principles into specific rules, and almost every exam question maps to one of them.

Standard	Sub-standards	Typical exam scenario
I. Professionalism	A. Knowledge of the Law; B. Independence and Objectivity; C. Misrepresentation; D. Misconduct; E. Competence	An analyst accepts an expensive trip from a company they cover, or copies a research report without attribution
II. Integrity of Capital Markets	A. Material Nonpublic Information; B. Market Manipulation	An analyst overhears merger news, or trades to create artificial volume
III. Duties to Clients	A. Loyalty, Prudence, and Care; B. Fair Dealing; C. Suitability; D. Performance Presentation; E. Preservation of Confidentiality	A new recommendation is emailed to large clients first, or a manager buys an unsuitable investment for a conservative client
IV. Duties to Employers	A. Loyalty; B. Additional Compensation Arrangements; C. Responsibilities of Supervisors	An employee takes client lists when leaving, or accepts a client bonus without telling the employer
V. Investment Analysis, Recommendations, and Actions	A. Diligence and Reasonable Basis; B. Communication with Clients and Prospective Clients; C. Record Retention	A report relies on a third-party source the analyst never checked, or fails to separate fact from opinion
VI. Conflicts of Interest	A. Disclosure of Conflicts; B. Priority of Transactions; C. Referral Fees	An analyst trades for their own account before clients, or receives an undisclosed referral fee
VII. Responsibilities as a CFA Institute Member or CFA Candidate	A. Conduct as Participants in CFA Institute Programs; B. Reference to CFA Institute, the CFA Designation, and the CFA Program	A candidate shares exam content online, or writes "CFA Level 3" on a CV in a misleading way

Five traps that cost the most marks

1. Fair dealing does not mean equal treatment. Standard III(B) requires that clients are treated fairly, not identically. A firm can offer premium service levels to clients who pay for them, as long as the levels are disclosed and available to everyone. What it cannot do is give some clients a new investment recommendation before others.

2. Gifts depend on who gives them. A modest gift from a client, given for past performance, generally just needs to be disclosed to the employer. A gift from a third party, such as a company you cover, is a threat to independence under I(B). Additional compensation from a client that depends on future performance needs written consent from your employer under IV(B).

3. The mosaic theory is not a loophole. Combining public information with non-material nonpublic information to reach a conclusion is allowed. Acting on a single piece of material nonpublic information is not, however it was obtained. Our guide to mosaic theory works through the edge cases.

4. Local law vs the Code. Under I(A), you follow whichever is stricter: applicable law or the Code and Standards. If local law permits something the Standards prohibit, the Standards win. If the law is stricter, the law wins.

5. "Most conservative answer" is not always right. Many candidates pick the option that does the least. Sometimes that is wrong. For example, a supervisor who suspects misconduct is expected to take action and investigate, not simply step back. Ask what the Standard requires, not what feels safest.

Worked example

Ana, a CFA charterholder, manages portfolios for retail clients. A long-standing client gives her two concert tickets worth $150 to thank her for strong returns last year. Ana's firm has no policy on client gifts. What should Ana do?

A. Decline the tickets, because accepting them violates Independence and Objectivity.
B. Accept the tickets and disclose the gift to her employer.
C. Accept the tickets only after obtaining written consent from her employer.

The answer is B. The gift comes from a client, relates to past performance, and is modest. It does not threaten Ana's independence in the way a gift from a company she researches would, so declining is not required. Written consent is needed for compensation tied to future performance, under Standard IV(B), which does not apply here. Disclosure keeps her employer informed of a possible conflict.

How to study Ethics

Read the Standards, then the examples. The Standards of Practice Handbook includes worked examples for each Standard. They are the closest thing to past exam questions and show how CFA Institute reasons through grey areas.

Do Ethics in small, frequent sessions. Ethics fades faster than calculation topics because it relies on fine distinctions. Thirty minutes of questions three times a week beats a single two-week block.

Keep an error log. For every wrong answer, write the Standard it tested and the one-line rule you missed. Within a few weeks you will see the same three or four confusions repeating.

Schedule it late as well as early. Learn the Standards early, then return to them in the final three weeks. Many candidates find their Ethics score drops between the first and last mock exam because they stopped practising.

Check which curriculum you sit. From the 2027 curriculum, GIPS is no longer a separate Level 1 reading, and the Standards guidance is organised as one reading per Standard. If you sit before then, you still need our GIPS guide.

Frequently asked questions

How much is Ethics worth on CFA Level 1?

Ethics is 15–20% of Level 1 for 2026 exams, about 27–36 of 180 questions. From February 2027, the weight falls to 10–15%.

How many Standards of Professional Conduct are there?

There are seven Standards: Professionalism; Integrity of Capital Markets; Duties to Clients; Duties to Employers; Investment Analysis, Recommendations, and Actions; Conflicts of Interest; and Responsibilities as a CFA Institute Member or CFA Candidate.

Is CFA Ethics tested at all three levels?

Yes. It is 10–15% at Levels 2 and 3, and it is tested in item sets rather than standalone questions at those levels.

What happens if I fail Ethics but pass the rest of the exam?

There is no separate pass mark for Ethics. Your overall result decides whether you pass, but CFA Institute may consider Ethics performance for candidates close to the minimum passing score.

Can I accept a gift from a client under the CFA Standards?

Generally yes, if it is modest and relates to past service, provided you disclose it to your employer. Compensation tied to future performance requires written consent from your employer.

What is the best resource for studying CFA Ethics?

The Standards of Practice Handbook, which is part of the curriculum, followed by as many practice questions as possible.

Is GIPS still tested at Level 1?

GIPS is part of the 2026 Level 1 Ethics topic. In the 2027 curriculum it is no longer a separate Level 1 reading.