The six principles of the Code of Ethics

What does the Code of Ethics say?

The Code of Ethics is the short, high-level statement of what every member and candidate stands for. It has six principles. The Preamble explains why they matter: the Code and Standards together are the foundation of the profession’s credibility and of the trust that clients and markets place in it.

Know the idea

The six principles in plain words

1. Integrity and respect : act with integrity, competence, diligence and respect, and in an ethical manner, toward the public, clients, employers, colleagues and other market participants.
2. Others first : place the integrity of the investment profession and the interests of clients above your own personal interests.
3. Care and independent professional judgment : use reasonable care and exercise independent professional judgment when analyzing, recommending, acting and doing other professional work.
4. Professional practice : practice, and encourage others to practice, in a professional and ethical way that reflects well on you and on the profession.
5. Integrity of capital markets : promote the integrity and viability of global capital markets for the ultimate benefit of society.
6. Professional competence : maintain and improve your own competence, and strive to help other investment professionals improve theirs.

Memorize

Code of Ethicsgeneral principles every member and candidate follows

• Integrity and respect Memorize integrity, competence, diligence and respect toward all
• Others first Memorize profession and clients before yourself
• Care and independence Memorize reasonable care, independent professional judgment
• Professional practice Memorize and encourage others to do the same
• Market integrity Memorize integrity and viability of global capital markets
• Competence Memorize improve your own and others'

Memory hook: I Owe Clients Proper Market Competence gives Integrity, Others first, Care, Practice, Markets, Competence in order.

How do you spot a fake principle?

Exam writers build the wrong options from three places: a Standard reworded as if it were a principle (“must not accept gifts that could compromise independence” is Standard I(B)), a commercial goal the Code never mentions (“maximize returns”), or a loyalty the Code does not name (“put your employer first”). A genuine principle is broad and has no detailed condition. If it sounds like a rule with exceptions and procedures, it belongs to the Standards.

Option on the exam	Where it really comes from
Maximize risk-adjusted returns for all clients	Not in the Code. Care and independent judgment are
Comply with every employer policy	Not a Code principle. Employer duties sit in Standard IV
Always disclose personal holdings	Closer to Standards VI(A) and VI(B), not the Code
Must not accept gifts that compromise judgment	Standard I(B)

Exam tip If an option is a long, specific condition, it is a Standard. If it is a short, broad commitment, it is probably the Code.

Go deeper How the principles map onto the seven Standards

The Standards are the principles made specific. Integrity and respect run through Standard I (Professionalism). Putting clients first becomes Standard III (Duties to Clients) and Standard VI (Conflicts of Interest). Care and independent judgment show up in I(B) (Independence and Objectivity) and V(A) (Diligence and Reasonable Basis). Market integrity is Standard II. Competence, once only a Code principle, now also has its own Standard, I(E). Duties to employers (Standard IV) and responsibilities as a member or candidate (Standard VII) rest on professional practice. You do not need to memorize a one-to-one table; the exam asks you to identify the principles, not to map them.

Go deeper Why the profession's integrity sits next to clients' interests

A client is harmed directly when an adviser puts herself first. But every such episode also lowers trust in the whole industry, which makes clients and investors more hesitant and raises the price of raising capital. By naming the profession’s integrity alongside clients, the Code treats an individual’s conduct as something that affects everyone who relies on the markets.