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You are a broker at an investment advisory firm. You and your client disagree on investment decisions he wishes you to make on his behalf.
You are a broker at an investment advisory firm. You and your client disagree on investment decisions he wishes you to make on his behalf. You feel that these investments fall outside of the client’s investment objective and risk tolerance. The client is adamant and informs you that if you don’t place the orders, he will find someone else in the firm who will do so. Should you comply with your client’s wishes or fire him? Provide a detailed justification for your decision.
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Lets break down the two potential courses of action complying with the clients wishes or terminating the client relationship Complying with the Clients Wishes Pros Maintain the client relationship Complying with the clients requests may help in maintaining a business relationship and retaining the clients assets under management Immediate revenue By executing the orders the firm would generate transaction fees and potentially earn commissions Avoiding conflicts and potential legal issues Complying may prevent immediate disputes or conflicts with the client Cons Violation of fiduciary duty Investment advisors have a fiduciary duty to act in the best interests of their clients If the proposed investments are not aligned with the clients objectives and risk tolerance executing the orders could breach this duty Ethical concerns Executing investments that the advisor believes are unsuitable may lead to ethical dilemmas and a tarnished professional reputation Longterm risks Complying with the clients wishes may expose the client to higher risks which could result in financial losses potentially leading to a loss of trust and the termination of the relationship anyway Terminating the Client ...Get Instant Access to Expert-Tailored Solutions
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