Ethical Responsibilities to Clients - Risk Suitability

Easy Professional Standards Application Responsibilities To Clients

Mark is a portfolio manager at a well-known investment firm. He has a client, Mrs. Smith, who has a moderate risk appetite and a long-term investment horizon. Recently, Mark has come across a high-risk investment opportunity that promises significant returns. Understanding that Mrs. Smith is risk-averse and primarily focused on stable income, Mark is considering recommending this investment. Which of the following actions would be the most ethical in this situation?

Recommend the investment to Mrs. Smith, emphasizing the potential high returns.

Discuss the investment with Mrs. Smith but ultimately leave the decision to her.

Inform Mrs. Smith about the investment opportunity, but advise against it based on her risk profile.

Hint

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