Ethical conflicts may arise as a result of

Question

Quizplus · Accepted Answer

All of the options presented can give rise to ethical conflicts in the financial industry.

Incentive compensation schemes can create conflicts of interest for financial professionals whose pay is tied to the products or services they sell, potentially leading them to recommend products that may not be in the best interest of the client.

Soft dollar arrangements involve investment managers using client's brokerage commissions to pay for research and other services, which can also create a conflict of interest if the investment manager is incentivized to choose more expensive services in exchange for a higher commission.

Marketing investment management services may lead to false or misleading advertising, and can create conflicts if the firm promotes services that the investment managers have little experience with or if they exaggerate the potential returns of their services.

Agency conflicts occur when the interests of the shareholders and management of a company diverge, potentially causing ethical dilemmas for board members and executives.

Thus, ethical conflicts can manifest from any of these practices, and it is essential to recognize their potential impact in the financial services industry.

Ethical Conflicts May Arise as a Result of