Canadian Securities Course (CSC) Practice Exam · Question
An investment advisor recommends a product to a client from which the advisor receives a significantly higher commission than other suitable alternatives, and this is not disclosed. This situation likely represents a(n):
A conflict of interest arises when an advisor's personal interest (e.g., higher commission) may influence their professional advice, potentially to the client's
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Question: An investment advisor recommends a product to a client from which the advisor receives a significantly higher commission than other suitable alternatives, and this is not disclosed. This situation likely represents a(n):
Answer options:
- Diversification strategy ✅ Conflict of interest
- Prudent investment decision
- Standard industry practice
Correct answer: Conflict of interest
Explanation: A conflict of interest arises when an advisor's personal interest (e.g., higher commission) may influence their professional advice, potentially to the client's detriment. Such conflicts must be disclosed and addressed.
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