Loyalty to Clients in Asset Manager Code

Very Hard Asset Manager Code Loyalty To Clients

As an investment manager at a registered investment advisory firm, Sarah is responsible for managing client portfolios. Recently, she received a promotional offer from a mutual fund company to feature their funds in a quarterly newsletter that she sends out to her clients. In exchange for the promotion, the fund company has offered to pay her a commission for any transactions that her clients make in their funds.

Before deciding on whether to accept the offer, Sarah reflects on her obligations under the CFA Institute Asset Manager Code, particularly regarding her duty of loyalty to her clients. She knows that her primary responsibility is to act in the best interests of her clients and that any outside compensation should not influence her judgments regarding their portfolios.

Considering this scenario, which of the following actions would best uphold Sarah’s loyalty to her clients?

Accept the promotional offer and disclose the commission to her clients.

Decline the promotional offer to maintain her independence and avoid conflicts of interest.

Negotiate for a lower commission and accept the offer, ensuring her recommendation is still in the best interest of her clients.

Hint

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