NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Ethical Issues
Which of the following is an example of the adviser's duty of fair and complete disclosure to a client?
Informing the client in writing of fees, material risks and any conflicts of interest before giving advice is the duty of fair and complete disclosure. It lets the client make an informed decision, unlike guaranteeing returns or breaching confidentiality.
- AInforming the client in writing of fees, material risks and any conflicts of interest before advisingCorrect
- BGuaranteeing a minimum return on a market-linked product
- CSharing the client's holdings with a friend of the adviser
- DAdvising only on products the adviser personally holds
Explanation
Disclosure covers fees, risks and conflicts so the client can make an informed decision. Guaranteeing returns is misleading, sharing holdings breaches confidentiality, and advising only on own holdings is a conflict.
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