NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Ethical Issues
An investment adviser receives a gift voucher worth a modest amount from a client after a successful advisory year. Which action is most consistent with ethical practice for the adviser?
The adviser should disclose the gift as required by the firm's gift policy and ensure it does not influence future advice. Transparency manages the conflict of interest and protects objectivity, whereas silent acceptance or soliciting gifts undermines the adviser's independence and the client's trust.
- AAccept it quietly and not mention it to anyone
- BAccept it only after disclosing it as per the firm's gift policy and ensuring it does not influence future adviceCorrect
- CAsk the client for a larger gift next year
- DAccept it and recommend only products the client prefers
Explanation
Ethical practice requires transparency and avoiding any influence on objectivity. Disclosure under the firm's policy manages the potential conflict of interest. Secret acceptance or tying advice to gifts compromises independence.
Did you get it right without looking?
One question tells you little. A timed set on Ethical Issues shows your real accuracy, how long you take and where you lose marks.
More Ethical Issues questions
- Ms. Kavita, a registered investment adviser, learns from a friend working at a listed company that the company will announce a large order w…
- Under the ethical principles expected of an investment adviser, which action best shows that the adviser is treating client information with…
- Which practice by an investment adviser is an example of maintaining client confidentiality?
- Mr. Raghavan, an investment adviser, receives a gift of expensive foreign holiday tickets from a mutual fund house whose scheme he is consid…
- Mr. Iyer, a 68-year-old retired clerk with a low risk appetite and a need for regular income, is advised by an investment adviser to put mos…
- Caselet: Ms. Meera Iyer, an investment adviser, manages advice for 40 clients. She has researched a small-cap stock with limited liquidity a…