Duties to Clients: Ethical Decision-Making

Hard Ethical Decision-making Duties To Clients

Jacob is a portfolio manager at a reputable investment firm. He has been managing the retirement funds for several clients for the past five years. Recently, Jacob received a lucrative offer from a hedge fund that promises significantly higher performance fees. The hedge fund specializes in high-risk strategies that could jeopardize the retirement goals of Jacob's clients.

Without discussing the implications with his current clients, Jacob is tempted to recommend that they shift their assets to the hedge fund in order to potentially benefit from the promised higher returns. Given these circumstances, what should Jacob consider when determining his ethical obligations to his clients?

Jacob should recommend the hedge fund to his clients, as higher returns could lead to better outcomes for his clients' retirement funds.

Jacob should first assess the risk tolerance of his clients and discuss the hedge fund's investment strategy with them before making any recommendations.

Jacob should refuse to discuss the hedge fund with his clients, as the firm’s focus on risk may not align with standard investment practices.

Hint

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