- CFA Exams
- CFA Level I Exam
- Topic 10. Ethical and Professional Standards
- Learning Module 3. Guidance for Standards I-VII
- Subject 20. Standard VI (C) Referral Fees
CFA Practice Question
As part of your financial advising services, you refer clients to a friend for their insurance needs. Your friend provides you with a referral fee for these clients.
B. You do not need to disclose the fee if your friend provides the proper service at the least cost.
C. You do not need to disclose the fee unless it is in excess of $100.
D. You cannot accept a referral fee because you have a fiduciary duty to your clients.
A. You must disclose this fee to your clients.
B. You do not need to disclose the fee if your friend provides the proper service at the least cost.
C. You do not need to disclose the fee unless it is in excess of $100.
D. You cannot accept a referral fee because you have a fiduciary duty to your clients.
Correct Answer: A
User Contributed Comments 7
| User | Comment |
|---|---|
| Khadria | I(B) in this guide explains "Modest gifts and entertainment are acceptable. For example, gifts that do not exceed $100 may be accepted as well as entertainment" but it doesn't say that they should not be disclosed. |
| nike | I (B) "Independence and Objectivity" is totally different from VI (C) Referral Fees. |
| MasterD | Correct. $100 rule applies to Independence and Objectivity but does not apply in relation to referral fees and or kick-backs. |
| sanyukta | it is simple: referal fees is not a gift.. |
| elisheva | good explanation. |
| nabilhjeily | a gift does not repeat itself on every transaction ...it must be disclosed |
| MapherRdz | why is not B? if the friend provides the service at the least cost, it must not be disclosed, right? |