If a dealer identifies a conflict related to a proprietary product, what is the recommended disclosure order?

• A. First, promote the proprietary product to maximize revenue.
• B. First, disclose conflicts after the investor signs the agreement.
• C. First, disclose conflicts, justify suitability, and offer independent alternatives when appropriate.
• D. First, withhold disclosure until the client asks.

Answer: (C)

When there’s a conflict related to a proprietary product, the investor must be informed about that conflict up front. The best disclosure order is to first reveal the conflict, then explain why the product is suitable for the investor’s situation, and finally offer independent nonproprietary alternatives when appropriate. This sequence helps the investor understand potential biases, assess whether the recommendation fits their needs, and compare other options to make an informed decision. Delaying disclosure, disclosing after the agreement is signed, or withholding information until asked would undermine fair dealing and the investor’s ability to evaluate choices.