Put the Record Retention standard, V(C), into practice
The idea
Members must develop and maintain appropriate records supporting their analyses, recommendations, actions and other communications with clients and prospects. Records are the property of the firm, so a member leaving may not take them without the employer's consent and must recreate supporting documentation at the new firm from public sources before relying on earlier conclusions. CFA Institute recommends keeping records for at least seven years where local regulation does not specify a period. The purpose is evidentiary: without records, neither the firm nor a regulator can establish that a reasonable basis existed at the time.
A practice question
Who owns the records supporting a member's analysis?
- The member who created themWhy not: Authorship does not confer ownership of work produced in the course of employment.
- The firm that employed the member — correct
- The clientWhy not: A client is entitled to communications about their own affairs, not to the firm's working papers.
Standard V(C) Record Retention treats the records as the firm's property. A departing member cannot take them, whoever created them.
A harder one
What retention period does CFA Institute recommend where local regulation is silent?
- Three yearsWhy not: Shorter than the recommended period, and too short to cover the horizon over which a recommendation may be questioned.
- Ten yearsWhy not: Longer than recommended. Retaining more is not a breach, and it is not the period the guidance names.
- Seven years from the record's creation — correct
Standard V(C) recommends seven years where local regulation specifies no period. Where the law does specify one, the stricter requirement governs.
The hardest tier
A member joins a new firm and wishes to rely on a recommendation made at their previous employer. What must they do?
- Recreate the analysis from public sources — correct
- Request the records from the previous employer's compliance departmentWhy not: The records are the former employer's, and it is under no obligation to hand them over.
- Rely on their recollection of the earlier workWhy not: Memory is not a record the new firm or a regulator can examine, which is the point of the requirement.
Standard V(C) leaves the supporting records with the former employer, so the member must recreate the analysis from public sources before relying on the conclusion again.
In the app: 12 practice questions on this outcome, a narrated walkthrough with diagrams, spaced review that brings it back before you forget it.
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