Ethical Considerations on Referral Fees

Hard Cfa Institute Code And Standards Conflicts - Referral Fees

During a networking event, an investment advisor, Jane, meets a colleague, Mark, who operates a third-party financial software company. Mark offers Jane a 10% referral fee on any new clients she directs to his company. Jane wishes to increase her revenue and is considering accepting this offer. However, she recalls the CFA Institute's Code of Ethics and Standards of Professional Conduct, specifically regarding conflicts of interest and referral fees.

What should Jane consider before accepting this referral fee from Mark?

Jane can accept the referral fee as long as she discloses it to her clients.

Jane should decline the referral fee because it creates a conflict of interest that could impair her impartiality.

Jane should only accept the referral fee if Mark's software has been approved by her firm's compliance department.

Hint

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