What should brokers do if faced with a conflict of interest?

When brokers encounter a conflict of interest, the appropriate and ethical action is to disclose it to the relevant parties. This practice upholds the principles of transparency and honesty that are essential in the broker-client relationship. Disclosing a conflict allows all parties involved to make informed decisions, ensuring that they understand all potential influences on the broker's recommendations or actions.

By openly sharing the details of the conflict, brokers are able to maintain trust and credibility with their clients and colleagues, which is crucial for long-term professional relationships. Additionally, such disclosure is often mandated by regulatory frameworks, reinforcing the importance of ethical conduct in the industry.

In contrast, acting in secrecy to protect commissions undermines ethical standards and violates the obligation brokers have to their clients. Avoiding the topic or only informing close colleagues also fails to address the conflict adequately and can lead to distrust and potential legal ramifications. Disclosing conflicts is the best practice for maintaining professionalism and ethical integrity in brokerage activities.