NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Ethical Issues
Under the ethical principle of fair treatment and integrity, which of the following is the most appropriate way for an investment adviser to handle a client complaint about a past recommendation that lost value, where the recommendation was suitable and documented?
The adviser should listen to the client, explain the documented rationale and the risks disclosed at the time, and tell the client about the available grievance redress channels. Records must never be altered, and refusing to engage or privately compensating the client is improper.
- ARefuse to discuss it because the recommendation was suitable
- BAlter the file notes to show a more conservative risk profile
- CListen, explain the documented rationale and the risks disclosed at the time, and inform the client about the grievance redress channelsCorrect
- DOffer to personally compensate the loss privately to avoid escalation
Explanation
The adviser should engage transparently, using accurate records, and tell the client how to escalate. Altering records is falsification, and private compensation or a refusal to engage are both improper.
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