Which best describes how conflicts of interest should be addressed?

• A. Do not disclose unless required by law.
• B. Disclose conflicts, manage or mitigate them, obtain client consent when required, and document the process.
• C. Proceed with the transaction without any disclosure.
• D. Involve the issuer to decide.

Answer: (B)

Conflicts of interest must be addressed through transparency, mitigation, and proper documentation. When a conflict exists, you should clearly disclose its nature to the client, explain how it could affect the advice or decisions, and outline the steps the firm will take to manage or mitigate the conflict. If required by regulation or firm policy, obtain the client’s informed consent before proceeding. Document the disclosure, the mitigation plan, and any client consent to create a clear record of how the conflict was handled.

This approach aligns with for-fair-dealing standards and helps the client make an informed decision while reducing regulatory and reputational risk. Disclosing only when legally required can leave clients in the dark about material conflicts; proceeding without disclosure fails to uphold transparency, and involving the issuer is inappropriate because it shifts the decision-making away from the client and creates potential bias.