Suggestions to handle Ethics questions

CFA Level II Ethics
#1

I have done the CFA readings for ethics twice and the EOCs. Yet, I am getting around 4 generally(3’s on the CFA mocks). Can some of you please suggest a good strategy on how to handle the ethics questions?

#2

Read the vignette and questions very, very carefully - and take them slowly. I found rushing the ethics questions makes you miss things. As you’re reading the vignette, you should be able to identify any violations or questionable behaviours. Make a note on the side of the page of the violation - or even just underline it. Or put a big question mark next to anything that makes you go “huh?”. And do some practice exams. I’m finding them to be very useful.

And remember the CFA is *US-centric*. I missed a point in one Schesher exam because I assumed that wash trades around the end of financial year were illegal (as they are in Australia), but Schwesher wrote that wash trades are simply a “tax minimsation strategy” and should be done if the client/investor benefits.

#3

I am also on the same boat specially Soft dollar standards, Reserch Objectivity & Prudent Man Rule. I also need some advise on this.Its very much frustating, any suggestions on this who are doing well in ethics…

#4

Know your ROS and Soft dollar standards. read and re-read them. I have a feeling the exam is going to be centred on ROS and soft dollars, since by now we should be pretty good at finding if any of the 7 standards were violated.

#5

will scwser be enough for this.

#6

good for review for uncovering violations to the 7 commandments of CFAI but it doesn’t have enough ROS/ soft dollar standards.

#7

Nice tips…Thanks Drake!

#8

if i learn line by line schweser ROS & Softdollar in that case still do u think that i have to go for CFAI book bcz CFAI is very huge…which one would u recomend CFAI or scwser, if i read CFAI, i will read only but if i go 4 scwser, i will learn line by line…ur suggestion will be highly appreciated…

#9

I’m also puzzled about the ethics part.

I have read and reread this part in the CFAI material and Schweser more than 5 times. Have done the CFAI EOC exercises so many times that i know them by heart by now. Have also completed more than 1000 ethics questions on Schweser’s Q-Bank, with an average score of 85%.

LI result was 70+, LII result was <50…

I don’t know what i can do more. How can it be such a different result when 85% of the ethics material remains the same over all the levels. And I have also studied the ROS and Soft Dollar standards very well for LII. I have the feeling that on the exam there’s always one small extra detail which is not covered in any of the material, not even CFAI. I know that we cannot discus exam content but the people who took the LII exam this June must know what I mean.

I know that ethics are very important, and i am willing to invest a lot of time in that. A lot! But I honestly don’t know what more i can do… It would be great if CFAI would provide us a few 100 more test questions. I would even be willing to pay for that.

Any tips?

Thanks

#10

Answering ethics questions has to be kind of a habit. You dont need to know all the standards by heart for this… Practising is the key. Did you invest enough time to understand why you were right and why you were wrong in Ethics questions?

In level 1 I realized that though I got some answers correct, my reasoning for getting the answer was not right! Believe me it can happen to anyone. So when you practise ethics, I suggest 5 questions a day over a 3 months period. This worked really really well for me. You got to learn from the questions you answer and as you keep doing that you can see that the answer literally pops out of the question paper for you!

Please believe me, It works!

#11

+1 … absolutely true… read ethics from CFAI material…Dont memorize line by line or in any way from schweser because even if you do, its the application that is being checked not the retention capacity… Understand the reasoning. Place yourself in that situation given by the problem and see what is the best you can do. Then check why your approach is not the best approach… Hope this helps

#12

thanks for your help.

Th problem is that I have used the approach that you suggest: answer questions, check why they were wrong , look up in the CFAI material, underline the specific part and/or make specific notes. (my errors usually concern small details which i have overlooked)

By doing this, i have greatly improved my knowledge about ethics. But my problem is that on exam day i always run into these very specific situations which i have never encountered before. This makes me doubt, and in the end (obviously, seen my score) choose the wrong answer…

My experience with Schweser is that the qbank questions moslty inquire about your high level knowledge of the Ethics. While CFAI EOC questions go much deeper. It’s only in the latter case that I learn the small details which are worth gold on exam day. Sadly enough there are only a limited amount of EOC examples available in thet CFAI material. So i’m looking for more of these CFAI-like questions to complement the standard CFAI EOC questions.

#13

Could you please give an example? That would really help us to help you… In Level 1 one of the most difficult thing for me was to understand difference between mandatory/recommended and good practise! Is that where you are getting stuck?

#14

I didn’t read the ethics chapters in level 1 and just skimmed them in level 2. Just keep doing problems over and over and over and over again. Repetition will get you thinking about it the right way. I think the advice of Sooraj of doing some every day over many weeks is a good idea. Remember your duty is always to your client.

#15

did >70 on both L1 and L2.

Key is to read the standards, then read the applications. highlight the special clauses/triggers for violations or make notes to review. Then review a few every night the weeks before the exam. Everything they test you on is int he CFAI material, the event, the trigger, the result. The test checks whether you just read the Code or read teh Code and the Application sections.

For Softdollars I didn’t have too much trouble, draw a flow diagram and fill in the pathways and nodes with information from the CFAI regarding when to use soft dollars. pretty simple once its on paper.

Prudent man; it’s a 10 page reading at tops if I recall correctly. No sweat, do it early and review it later.

#16

An example without going into details too much: sometimes you’re supposed to make written notifications about certain events, and sometimes the ‘written’ part is not explicietly menitoned, and ‘a’ notification will do. At first read, i wouldn’t notice this difference. Only after i encounter it in an EOC question or so, i would say ‘hey, pay attention to this small but meaningful detail’.

Well, there’s tons of small details like that, some of which i can still miss even after reading it 5 times, until i encounter it in an EOC question

For that reason i would like to have more practise questions.

#17

I have carefully read every sentence in that section multiple times, also the applications. Still i’m having trouble with it. So i don’t fully agree with your statement. I think that a full mastery of every detail is necessary

#18

One of the best ways to solve these kind of questions is to put yourself in the clients shoes. Some examples which can help you solve and why I think it would help:

  1. Would you mind if the notification was an email or a letter - As a client you would NOT mind.

  2. The company is giving premium services for higher charges and they have disclosed it to you, the client - As a client you would NOT mind again as long as YOU ARE KEPT INFORMED of the premium services available.

  3. You as a client, have not completed your updates with the IPS and your money is lying with the manager - As a client you would LIKE the PM to invest your money in the riskfree interest fetching fixed income product…

I hope this helps you mate, and I understand your fear of ethics completely. I seriously hope this is a bit helpful to you.

#19

Thanks for your help. The example above is exactly what makes it so easy to overlook certain details. As a client, you wouldn’t care if you got a written notification or not. But according to the Standards, sometimes it needs to be written, and sometimes not. This is easy to mix up…

I guess there’s nothing much to do then to repeat a few times more and try to find some extra exercises from some prep provider. And then hope for some luck on the exam…

#20

My friends be very careful with Ethics. This monster was too subjective…I failed band 10 with Ethics below 50. I guess Ethics single handedly made me to fail June 2012 Level 2 exams. Do alot of practice questions from qbank, CFAI EOC, mocks etc. I could not believe that I failed Ethics, I will however take the outcome positively and re-take come June 2013…I thought I had nailed it little did I know…The message be very careful with Ethics, the questions might turn out to be too subjective…