Standard I(E) Competence

Standard I(E) requires members and candidates to act with and maintain appropriate knowledge, skills, and diligence when they carry out their professional responsibilities so that they provide a high standard of professional service for their clients and employers. The Code of Ethics requires members and candidates to “act with integrity, competence, and diligence” and to “maintain and improve their professional competence and strive to improve the competence of other investment professionals.” Standard I(E) directly supports these requirements of the Code of Ethics.

Given the diverse range of professional services members and candidates engage in, the knowledge, skills, and abilities necessary to successfully fulfill their roles will vary according to the nature of their professional duties. Determining what conduct specifically constitutes competence will differ for each role and will depend on the facts and circumstances applicable to each member or candidate.

While the specific conduct that leads to competence may be different for each member or candidate, the underlying principle of competence is straightforward. To be competent in your role and meet your duties under this standard means having sufficient knowledge, skills, and abilities suitable for a professional to work in that specific role with success. These attributes govern the expertise, experience, and accomplishments that professionals need to perform at the highest level.

• Knowledge is the body of information applied directly to the performance of a function and how effectively it is applied.
• Skills are capabilities to perform a role-specific act or function to complete specific tasks and achieve professional goals.
• Abilities are capabilities and attitudes that support behaviors that result in observable outcomes.

While competence allows members and candidates the opportunity to undertake an activity successfully, lack of competence cannot necessarily be determined by an unsuccessful or a negative outcome. Many competent investment professionals have experienced failure or loss in their professional lives. For example, a competent investment manager may not always make profitable investment decisions. A competent securities analyst may not accurately predict the future prospects of an investment, despite diligent and thorough analysis.

Competence is not limited to an examination of the education level of a member or candidate. A highly educated investment consultant may not have the experience to undertake consulting activities in an unfamiliar area of practice. An accounting professional supremely competent in providing financial statement audits may not be competent in assessing compliance with performance presentation standards, such as the GIPS standards. Or an investment consultant hired to conduct a search for an investment manager focused on sustainable investing may not have the skills needed to competently evaluate managers with that focus.

Over time, the professional responsibilities of members and candidates may change or expand, requiring new or different knowledge, skills, and abilities. Members and candidates will develop and refine their skills and abilities as their careers progress. Standard I(E) imposes the duty to not simply achieve but also maintain competence, emphasizing the need for members to continuously maintain or improve the competence required of their professional position. Although Standard I(E) contemplates ongoing professional development to maintain proficiency and competence, this standard does not mandate participation in a particular continuing education program or professional development plan. Members and candidates can attain and maintain the competence needed to fulfill their professional responsibilities in a variety of ways.