Ethics Question - Anybody Have A Good Way of Explaining This Answer?

[achokshi]

I thought this answer was B but it is not. The answer given doesn’t totally explain why it wouldn’t be B, so I was wondering why not?
Here’s the question:
[question removed by admin]


Answer = A
“Guidance for Standards I-VII”, CFA Institute
2013 Modular Level I, Standard III (A) Loyalty, Prudence, and Care
Study Session 1-2-b

Distinguish between conduct that conforms to the Code and Standards and conduct that violates the Code and Standards.

A is correct. According to Standard III (A) Loyalty, Prudence, and Care, Gupta’s duty of loyalty, prudence, and care is owed to the participants and beneficiaries (members) of the pension plan. As a church plan, the restrictions are appropriate given the objectives and constraints of the portfolio.

 

[joe35y]

As an investment advisor you have a duty to advise your client on your thoughts, but ultimately your duty is to serve your clients wishes. However, when advising a retirement fund the portfolio should consider the best wishes of the beneficiaries of the fund. I’m having a hard time choosing between A or C. At first I was leaning more towards C since the funds beneficiaries would like to experience the higher return. However, the funds objectives and constraints of the portfolio prohibit the use of alcohol and tobacco and the beneficiaries have opted into the fund with this knowledge. So ultimately I chose A.
Also if the manager chose to include the stocks the tabaco and firearm companies, it would be against the investment objectives of the fund, I think he would be violation of sutability.