Paul is a registered investment adviser representative in State M. He is offered a fee by a mutual fund company for each client he refers to the fund. According to the Uniform Securities Act, what must Paul do before accepting such compensation?

1. ADisclose the arrangement to the client in writing before making the recommendation.✓ Correct answer
2. BAccept the fee as long as he is already registered as an IAR.
3. CRefuse the compensation, as it is always prohibited for IARs.
4. DSeek approval from the State Administrator before accepting the fee.

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