Certified Financial Planner (CFP) Exam 2026 – 400 Free Practice Questions to Pass the Exam

It is essential for George to disclose any potential conflicts of interest to ensure transparency and maintain the trust of his clients. When a firm owns certain mutual funds, it can create a conflict as the firm's financial interests may not necessarily align with the best interests of the clients. This ownership could incentivize George to recommend those specific mutual funds over others that might be more suitable for the client, thereby influencing his recommendations based on personal gains rather than the client's best interests.

By disclosing the firm's ownership of mutual funds, George is taking a proactive step to inform his clients of potential biases. This helps clients make informed decisions about the investments that are presented to them. Transparency regarding such financial arrangements is a key aspect of fiduciary duty and ethical financial advising.

In contrast, the other options do not represent significant conflicts of interest in the same way. For instance, while commission structures can be important to understand, they are typically a common practice in the industry, and not disclosing them would be more of an ethical breach than a direct conflict. Similarly, a professional designation like CFP® enhances credibility but does not imply a conflict, and personal assets are generally considered private information that doesn't directly impact professional recommendations.