An investment advisor receives an offer from a mutual fund company to attend an all-expenses-paid trip to a golf resort for consistently directing client assets into their funds. The advisor's firm prohibits such gifts. If the advisor accepts the trip, what conflict of interest issue arises?

Question: An investment advisor receives an offer from a mutual fund company to attend an all-expenses-paid trip to a golf resort for consistently directing client assets into their funds. The advisor's firm prohibits such gifts. If the advisor accepts the trip, what conflict of interest issue arises?

Answer options:

• A conflict between the advisor's interest and the firm's compliance policies. ✅ A conflict between the advisor's interest (personal gain) and the client's best interest (potential for biased recommendations).
• A conflict between the mutual fund company's interest and the firm's interest in fair competition.
• A conflict regarding the advisor's Know Your Product (KYP) obligations.

Correct answer: A conflict between the advisor's interest (personal gain) and the client's best interest (potential for biased recommendations).

Explanation: Accepting gifts and benefits can create a conflict of interest where the advisor's personal gain is prioritized over making recommendations solely in the client's best interest, specifically regarding product selection, according to NI 31-103 guidance on conflicts.