Ethical Duties to Clients in Investment Recommendation

Very Hard Ethical Decision-making Duties To Clients

A financial advisor, Blake, has been managing accounts for a small group of high-net-worth clients for several years. Recently, Blake encountered a new investment opportunity that has consistently outperformed others in the same sector. However, he realizes that this investment has a high degree of risk associated with it, and not all clients have the same risk tolerance. In a meeting with his clients, Blake decides to recommend the investment to the group, emphasizing past performance without detailing the specific risks involved.

Given this scenario, which of the following actions by Blake would be most ethical regarding his duties to clients?

Blake should provide a clear and comprehensive analysis of the risks associated with the investment, tailored to each client's risk tolerance before making a recommendation.

Blake should present the investment opportunity as a general option without necessarily considering each client's risk tolerance, as all clients have equal opportunity to decline.

Blake should only present investment opportunities that have historically performed well, as past performance is a key indicator of potential success.

Hint

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