Standard V (C) - Record Retention

Members and Candidates must develop and maintain appropriate records to support their investment analysis, recommendations, actions, and other investment-related communications with clients and prospective clients.

Guidance

• The records are a property of the firm and members cannot take them while leaving without the consent of the firm.
• If there are no regulatory requirement, CFA Institute recommends retention period of 7 years for such records.

Example

One of the clients of an investment management firm is upset due to the negative returns by their portfolio over the past one year. In the portfolio about 40% of funds are allocated to automobile stocks and these are the stocks that suffered major losses during the year. The client’s complain is that the investment manager should not have allocated so much money to the automobile sector. The investment manager however has records to show the reason for allocate these funds to the automobile sector and even the investor policy statement which has been updated regularly mentions this clearly. The records also indicate that asset allocation strategy was clearly explained to the client. This is not a violation of the Code and Standards.