A CFP professional is advising a client, Mr. Henderson, on investment options for his retirement portfolio. The CFP professional discovers that their firm has an internal fund that offers a slightly higher commission to the advisor than other comparable external funds. The internal fund's performance and fee structure are otherwise competitive. How should the CFP professional proceed in accordance with professional responsibility and ethics?

Question: A CFP professional is advising a client, Mr. Henderson, on investment options for his retirement portfolio. The CFP professional discovers that their firm has an internal fund that offers a slightly higher commission to the advisor than other comparable external funds. The internal fund's performance and fee structure are otherwise competitive. How should the CFP professional proceed in accordance with professional responsibility and ethics?

Answer options: ✅ Disclose the conflict of interest to Mr. Henderson and recommend the fund that best meets his needs, even if it's not the internal fund.

• Recommend the internal fund without disclosing the commission difference, as it is competitive and benefits the firm.
• Only present external fund options to avoid any potential conflict of interest.
• Recommend the internal fund and highlight its benefits, as the higher commission is a standard industry practice.

Correct answer: Disclose the conflict of interest to Mr. Henderson and recommend the fund that best meets his needs, even if it's not the internal fund.

Explanation: The CFP professional must always act in the client's best interest, which includes disclosing any conflicts of interest. While the internal fund might be competitive, the higher commission creates a conflict that must be transparently communicated, allowing the client to make an informed decision.