Pg.101 CFA books eg., 4 Portfolio mgr for a bank receives additional compensation when he is succesful in assisting in sale process and generation of assets under assesment. pg.100 CFA book. eg.,3 Portfolio mgr for a bank receives compensation for each referal he makes to Central trust broker and personal management dept (they are not external) which results in sale. He does not disclose in agreement of sale Eg.4 is fine 3 is not… why… r they not the same
4 - he is referring to his own bank and I guess that is to be expected 3- he is referring to someone else. I’m not the best at these, just an opinion.
read further down on eg 4 - it says: best practice dictates PM must disclose to clients they are being compensated for referring clients to firm products. as always, err on side of caution on these ones…
if you sell services to internal firm, you don’t have to disclose it since its understood by the client that you will get referal fees. however, when its to external party (broker), then you have to disclose it.
wasn’t the one guy in a bank branch or trust department and he was recommending mutual fund and getting referral fee. had to disclose. money manager promotiing his dept’s services doesn’t have to disclose even if he gets direct fee for new assets. that’s my recollection… seems somewhat strange though.