Standard I(E) – Competence

Members and Candidates must act with and maintain the knowledge and skills necessary to fulfill their professional responsibilities.

Compliance

Standard I(E) – competence requires members and candidates to apply and maintain the knowledge, skills, and diligence necessary to deliver a high level of professional service. This standard supports the Code of Ethics, which calls for integrity, diligence, and continuous professional development.

The exact knowledge and skills needed vary by role, but the core expectation is clear that professionals must have the expertise and ability to perform their responsibilities effectively. Competence reflects the appropriate application of knowledge, role-specific skills, and professional judgment not just education. A competent professional may still experience losses, errors, or setbacks, but must demonstrate sound preparation and capability in their work.

Violation

A member or candidate violates the standard when they fail to maintain the knowledge, skills, and abilities required to perform their professional responsibilities at an appropriate level. Examples of violations include:

• Failure to maintain professional development and ignoring new developments in your field of work.
• Neglecting ongoing learning and never updating their skills or knowledge.
• Not preparing for expanded responsibilities.
• Overstating ability without necessary skills.

Question

Emma Clark, CFA, a senior manager in the treasury department has recently been promoted to oversee her firm’s alternative investments division. She doesn’t have much prior experience with private equity or hedge funds but she believes that her experience and prior achievements in treasury are sufficient. She immediately begins advising clients on alternative investment products without additional training, or professional development.

Which of the following options is Emma most likely in violation of Standard I(E) – Competence of?

A. She would violate Standard I(E) – Competence by overstating her ability without necessary skills.

B. She would violate Standard I(E) – Competence by engaging in misrepresentation.

C. No violation would occur.

Solution

The correct answer is A.

Clark has accepted responsibilities in an area where she lacks the necessary knowledge and skills and has not taken steps to develop them. This constitutes overstating her ability without acquiring the professional competence required, which is a violation of Standard I(E) – Competence.