Referrals to family and friends: Issues that could turn sour

INVESTORS in Singapore do discuss money matters and investments with their spouse, as well as close personal friends and work colleagues. Typical subjects include investment goals, performance, market news and what to invest in next. In the course of a chat, it is not uncommon for one party to recommend a particular professional. It is also not uncommon that friends, family and associates seek recommendations on professionals who could potentially help with investment plans.

A word of caution, though. The practice of recommending someone may work for most people. But one needs to be cognisant of relationships turning sour, especially if risk assets underperform. Should a professional be recommended to investors, pertinent issues such as potential conflicts of interest and referral fees, if any, need to be addressed before proceeding with an investment arrangement to prevent a potentially unpleasant situation in the future.

Disclosure of conflicts standard

CFA Institute is the global association of investment professionals that sets standards for professional excellence and credentials. Its Disclosure of Conflicts Standard requires finance professionals to make full and fair disclosure of all matters that could reasonably be expected to impair their independence and objectivity, or interfere with their duties to their clients, prospective clients and employer.