How should fees, including commissions, be disclosed?

• A. Fees should be announced verbally at the end of the engagement.
• B. Only disclosed when the client requests.
• C. Clearly present upfront and ongoing fees, how they are calculated, and whether commissions or incentives could influence recommendations.
• D. Disclosures are unnecessary if the product is transparent.

Answer: (C)

Transparent disclosure of all fees and potential conflicts of interest is essential so clients understand costs and how recommendations are influenced. Fees should be presented clearly upfront and reviewed over the course of the relationship, including exactly how they’re calculated—whether flat, percentage-based, asset-based, or contingent—as well as any commissions or incentives that could sway the advice given. This upfront clarity helps clients compare options, assess value, and determine whether the recommendations align with their best interests.

Relying on verbal promises at the end of an engagement, waiting for the client to request disclosures, or assuming disclosures aren’t needed if the product seems transparent all fall short of responsible practice. Proactive, comprehensive disclosure ensures clients aren’t surprised by costs and that any potential conflicts are understood before decisions are made.