Not sure if anybody has done this but wow is ethics not been kind to me.
An individual KIM, pays an investment management fee to Akagi of 10% for bringing in clients for the first 24 months in the fund. Kim tellls the clients verbally. Akagi also discloses to each client the fee he expects to earn from this arrangement ONCE an agrremenent is signed.
I get that the appropriate disclosure is PRIOR to signing the agreement and I also get that KIM needs WRITTEN disclosure and not verbal. Also says KIM has violated supervisory duties by not being aware that Akagi did not disclose the nature and value of the benefit.
What I dont understand is how this is even a REFERRAL fee. Kim has hired Akagi to bring clients to his company. Akagi is not recommending products outside of the firm. Akagi is only getting a 10% of the investment fee for bringing clients in but I don’t see this as being a referral.
I see a referral as being --> recommending a broker or something outside of the firm.
If anybody wants to look at the topic test, its’ Topic Test 1 on the CFA site – KIM
Much appreciated.