What does the term "conflict of interest" imply in finance?

The term "conflict of interest" in finance refers specifically to situations where an individual's personal interests may compromise their professional responsibilities and duties to clients. This can occur when a financial professional has a vested interest in a company or investment that could influence their decisions, potentially leading to actions that do not align with the best interests of their clients. Such conflicts could result in biased advice or recommendations, which can undermine trust and lead to ethical dilemmas.

Understanding this concept is crucial in maintaining integrity within financial practices. It's essential for professionals to disclose any potential conflicts and to prioritize their clients' interests to maintain ethical standards and comply with regulatory requirements.