Assessing Loyalty to Clients in Asset Management

Very Hard Asset Manager Code Loyalty To Clients

As part of a boutique asset management firm, Laura, a portfolio manager, has recently developed a new investment strategy that targets high-frequency trading opportunities. After reviewing potential clients for this strategy, she realizes that several of her existing clients do not have the risk tolerance or capital base suitable for such a strategy. Nevertheless, Laura is enthusiastic about the possibility of implementing her new strategy and considers allowing existing clients to participate, despite their misaligned profiles.

Amidst this situation, Laura's colleague, Robert, advises her about the importance of considering client interests above her personal ambitions for implementing innovative strategies. He reminds her of the Asset Manager Code of Professional Conduct, particularly under the principle of 'Loyalty to Clients.'

Which of the following actions taken by Laura best aligns with the principle of 'Loyalty to Clients' as outlined in the Asset Manager Code?

Laura decides to present the high-frequency trading strategy to her existing clients, emphasizing the potential profits, regardless of their stated risk tolerance.

Laura chooses to withhold her new strategy from her existing clients and focuses on developing it for a new client base that is more aligned with the strategy's risk profile.

Laura seeks her clients' permission to include them in the new strategy, reassuring them that it has been designed to meet their needs.

Hint

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