Navigating Ethical Dilemmas in Client Advising

A financial advisor, Jordan, is faced with a difficult decision when a longtime client, Mrs. Thompson, sits down for their annual review. During the meeting, Mrs. Thompson reveals that she has developed a strong interest in socially responsible investing (SRI) and asks Jordan to diversify her portfolio with SRI-focused funds. However, Jordan notices that the funds in Mrs. Thompson's current portfolio are underperforming and stand to impact her long-term financial goals.

As an experienced advisor, Jordan is aware that recommending SRI funds might result in a lower expected return compared to the current investments. Additionally, Jordan has relationships with SRI fund managers who offer lucrative incentives for recommending their products.

Discuss how Jordan should navigate this ethical dilemma while upholding professionalism and serving Mrs. Thompson's best interests. Include relevant principles from the CFA Institute's Code of Ethics and Standards of Professional Conduct in your response.