Conflicts of Interest in Investment Recommendations

Very Easy Professional Standards Application Conflicts Of Interest

James is a charterholder who manages client accounts for a wealth management firm. One of his clients, Mrs. Smith, expressed interest in investing in a new mutual fund that James has personal investments in. James is considering recommending this fund to Mrs. Smith. In this scenario, what is James' best course of action to adhere to the CFA Institute's Standards of Professional Conduct, particularly regarding conflicts of interest?

James should disclose his personal investment in the fund to Mrs. Smith before making the recommendation.

James should recommend the fund to Mrs. Smith without disclosure, as it is a good investment.

James should refrain from recommending the fund to Mrs. Smith to avoid any potential conflict.

Hint

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