What must members and candidates disclose to clients regarding the investment process?

Members and candidates are required to disclose the basic format and principles used in the investment process to clients. This disclosure ensures that clients have a clear understanding of the methodology and strategies employed in managing their investments. By providing insight into the principles guiding the investment process, it fosters transparency and helps build trust between the investor and the investment professional. It also aids clients in making informed decisions as they can assess the appropriateness of the investment approach in line with their own goals and risk tolerance.

Disclosure of the basic format and principles does not require more exhaustive matters, such as the individual performance of all investments or all available investment opportunities, which could overwhelm clients and is often impractical. Furthermore, predictions about future market performance can be speculative and may not provide a grounded understanding of the investment process, making such disclosures less meaningful compared to the foundational strategies in place. Thus, option B reflects the essence of ethical communication in investment practices.