Relationship Disclosure must give the client a general explanation of how investment performance benchmarks may be used to assess investment performance . It is not necessary to provide every conceivable benchmark, a prescribed minimum number of benchmarks, or benchmarks used by competing products. Consequently, B is the correct answer .
CIRO IDPC Rule 3216(5)(ii)(m) expressly requires “a general explanation of how investment performance benchmarks might be used to assess the performance of a client's investments” , together with information concerning any benchmark information the Dealer Member may make available to the client. This requirement is designed to help a retail client understand the purpose of benchmarking rather than overwhelm the client with exhaustive comparative data.
A benchmark provides a reference point against which investment or portfolio performance may be considered. For the comparison to be meaningful, the benchmark should be relevant to the investment's asset class, geographic exposure, market segment and risk characteristics. An equity portfolio, for example, should not normally be evaluated against an unrelated short-term fixed-income benchmark.
The CIRE syllabus separately requires candidates to understand both the purpose and content of relationship disclosure and the use of relevant investment performance benchmarks , reinforcing the importance of appropriate—not exhaustive—benchmark comparison.
Study Guide Reference: CIRE Elements 3.4 and 3.16; IDPC Rule 3216(5)(ii)(m).
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