When a CFA charterholder receives a referral fee, what is a mandatory action?

When a CFA charterholder receives a referral fee, it is essential to disclose the nature of the fee to the client beforehand. This requirement aligns with the CFA Institute's ethical standards that emphasize the importance of transparency and the need for clients to be fully informed about any potential conflicts of interest. By disclosing the fee, the charterholder ensures that the client is aware of any financial incentives that may influence the advice or services being provided. This practice fosters trust and allows the client to make informed decisions, adhering to the principles of integrity and professionalism that are central to the CFA Code of Ethics.

Engaging in disclosure not only protects the interests of the clients but also upholds the integrity of the profession by promoting accountability among charterholders.