sorry in advance if this has been posted…searched a bit. If the client requested the broker, and was notified that they may not give the best execution, doesn’t the firm have to do what the client wishes. I know the arrangement is not benefiting the client but that is not the reason CFAI says its wrong (should get best execution) Insights here anyone cares to share?
Squirrel, for that question isn’t the problem that they then try to use that firm for all the rest of their clients and not just the one who specifically requested it?
I believe kbakes is right, I think if they were doing it just for the client then it would be ok
totally agree, but that is not why they said it was wrong. I assume the correct answer was D. Also, there were no other clients at the time.
My question with that vignette was that the soft dollars were being directed to something that has nothing to do with investment management?! The computer lab at her alma-mater? Can you do that? Can I call my broker and ask him to use soft dollars from my account to buy candy for my neice?
My thoughts were f*ck the client, CFA standard go first. They are the bible.
I had trouble with ‘D’ as well. It says that they should trade ‘only’ if it gives best price and execution. I think that’s incorrect, especially when one of the client specifically requested that brokerage despite it not having best execution.
Soft dollars should benefit the client. If the client requests it then by defintion it is in their interest.
Not true. It has to benefit the ultimate beneficiaries of the plan.
in this case, the beneficiary was the client. I think this was a bad question, because as someone stated above, that was the only client they had, and should do as requested. If I used a brokerage, as a client, as some other firm that i really liked, and would like to keep continue using them after moving to a different advisor, that’s my decision
Squirrel24 Wrote: ------------------------------------------------------- > totally agree, but that is not why they said it > was wrong. I assume the correct answer was D. > > Also, there were no other clients at the time. It says that they are making prospective clients sign a waiver that they will only go through a specific broker. The question was referring to the waiver in general, not to the request of the individual client.
I think the trick was that the Brokerage was going to refer clients over so the employer was benefiting, not the client. Also, from my stand point it was a pooled account, not a single account.
Completely agree that it was a pooled accounts, which even the agreement from clients is not acceptable