easy · Certified Financial Planner Professional Conduct
The Chen household reviews your firm's marketing materials and observes that you are described as 'fee-only.' However, you recently learned that your business partner receives 12b-1 fees from mutual fund companies for assets held by other clients of the firm.
Based on the Standards of Conduct, which action is required regarding your compensation representation?
- The fee-only description may be retained provided the 12b-1 fees are fully disclosed in the Chen family's written agreement.
- The fee-only description must be removed immediately because a related party receives sales-related compensation.
- The description is accurate because you personally do not receive the 12b-1 fees and do not share in your partner's specific revenue line.
- The description may be updated to 'fee-based' only if the 12b-1 fees exceed five percent of the firm's total annual gross revenue.
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