Conflict of interest
Also called: conflicts of interest
A situation in which the person advising you gains more from one of your choices than from another, which can bend their advice.
Common conflicts in finance include commissions on products, payments for promotion, referral fees from brokers or apps, owning the shares being recommended, and sales targets.
A conflict does not mean advice is wrong, but it changes how much weight the advice deserves. Disclosure helps you weigh it; it does not remove it.
Example
A distributor paid a higher commission on one fund than another has a conflict of interest when you ask which fund to choose.
Learn more in these lessons
- Undisclosed conflicts of interestHow do conflicts of interest affect the financial advice you get?
- Education, research and investment adviceWhat is the difference between financial education and investment advice?
Related terms
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