Compensation Structure and Client Interests

Easy Cfa Institute Code And Standards Employer Duties - Compensation

A financial analyst is employed by a well-known investment firm. Recently, the firm introduced a new compensation structure that rewards analysts based on the performance of the assets they manage. The analyst is excited about this incentive as it aligns their interests with those of the clients. However, the analyst begins to worry if this new compensation plan might lead to unethical practices, such as taking excessive risks to improve short-term performance. According to the CFA Institute Code of Ethics and Standards of Professional Conduct, what should the analyst prioritize in light of this new compensation structure?

Prioritize maximizing personal bonuses regardless of the client's risk tolerance.

Ensure that investment decisions are in the best interest of the clients.

Focus solely on the short-term performance of the investments.

Hint

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