Client Retention vs. Ethical Recommendations

As a CFA charterholder and investment advisor, you are approached by a long-time client who expresses frustration over the recent performance of their portfolio. They hint that they are considering either withdrawing their assets or reallocating those assets to a competitor. In an effort to retain the client, you contemplate recommending that they invest in a newly launched product offered by your firm, which includes a performance incentive structure.

However, you are aware that this product has not performed well in the past due to high fees and you suspect that recommending it might not be in the best interest of your client, especially considering their expressed dissatisfaction with their current portfolio's performance.

Which of the following options best aligns with the CFA Institute’s Code of Ethics and Standards of Professional Conduct?