A portfolio manager at a registered firm is evaluating their compensation structure and identifies that a significant portion of their compensation is tied directly to the sale of proprietary products over third-party alternatives, even when a third-party product might be more suitable. Which section of National Instrument 31-103 (NI 31-103) is most directly concerned with addressing this potential conflict of interest?

Question: A portfolio manager at a registered firm is evaluating their compensation structure and identifies that a significant portion of their compensation is tied directly to the sale of proprietary products over third-party alternatives, even when a third-party product might be more suitable. Which section of National Instrument 31-103 (NI 31-103) is most directly concerned with addressing this potential conflict of interest?

Answer options: ✅ Part 13 - Conflicts of Interest

• Part 11 - Client Relationships
• Part 12 - Handling Client Assets
• Part 10 - Reporting to Clients

Correct answer: Part 13 - Conflicts of Interest

Explanation: Part 13 of NI 31-103 specifically addresses conflicts of interest, requiring registrants to identify and address material conflicts of interest, including those related to compensation arrangements that could influence client recommendations.