Disclosure

The cornerstone of good and ethical communication with clients is the concept of disclosure, or revealing what a client would need to know to make an educated decision about your services or about an investment you’re presenting them with. That doesn’t mean you need to reveal every single fact about your life and career, or every tidbit of information ever generated about a potential investment, but just those considered material facts. That means that you need to share anything that a reasonable person would want or would need to know as a part of the decision making process. This would be a good time to reacquaint yourself with the brochure rule mentioned in Chapter 1.

As part of the disclosure process it is crucial that you don’t misrepresent or omit any material facts. Misrepresentation means that a professional doesn’t accurately describe or communicate an aspect of his or her qualifications, of his or her services, or of an investment. Omitting means that a professional just flat out skips over even mentioning something that a reasonable person would want to know.

Test Note: If the exam asks whether it is okay to omit facts when dealing with a client/investor, the answer is that it is okay to omit immaterial facts, but not okay to omit material facts. Material facts are those that are relevant to making an informed investment decision.

There are a number of situations that require pr