Chartered Investment Manager (CIM) Practice Exam · Question
A portfolio manager advises a client to invest in a fund where the manager or their firm receives a higher commission or trailer fee, even though a similar, lower-cost fund might be more suitable. This scenario represents a:
A conflict of interest arises when an advisor's personal interests (e.g., higher compensation) could potentially influence their professional advice, potentiall
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Question: A portfolio manager advises a client to invest in a fund where the manager or their firm receives a higher commission or trailer fee, even though a similar, lower-cost fund might be more suitable. This scenario represents a:
Answer options:
- Standard investment recommendation. ✅ Conflict of interest.
- Tax-efficient strategy.
- Client suitability assessment.
Correct answer: Conflict of interest.
Explanation: A conflict of interest arises when an advisor's personal interests (e.g., higher compensation) could potentially influence their professional advice, potentially to the detriment of the client.
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