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Answer: disclose to all clients the increase in commission rate.
According to CFA Institute Standard VI(A): Disclosure of Conflicts, investment professionals must fully disclose all material conflicts of interest to clients. The increase in commission rates for internally managed funds creates a potential conflict of interest, as Park may be incentivized to recommend these funds due to higher compensation rather than solely based on client needs. Park must disclose this conflict to clients so they can evaluate whether the recommendation is in their best interest. However, Park can still invest in internally managed funds if they align with client needs, provided the conflict is properly disclosed.
Author: LeetQuiz Editorial Team
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To comply with the Standards, Park must:
A
disclose to all clients the increase in commission rate.
B
refrain from investing in the internally managed funds.
C
invest for clients in funds with the lowest commission rates.
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