Which of the following is a disclosure requirement for an advisor accepting performance-based fees?

Performance-based fees for investment advisors are structured in a way that their compensation is tied to the performance of the investments they manage. This fee structure can lead to potential conflicts of interest, particularly if advisors are incentivized to pursue higher-risk strategies that may enhance their own compensation but not necessarily align with the best interests of the client.

The requirement to disclose that performance-based fees may lead the advisor to recommend higher-risk strategies is crucial. This transparency allows clients to understand the implications of such fee arrangements. They need to be aware that the advisor's financial incentives could influence their investment decisions, potentially leading to riskier investments that could impact the client's financial goals.

In contrast, the other options do not align with standard disclosure requirements. Advising that performance fees guarantee higher returns misleads clients, as investment returns are inherently uncertain. Sharing fee structures with a client's family is not a mandated disclosure, and while SEC approval may be necessary in some contexts, it is not specifically a requirement related to the acceptance of performance-based fees. Thus, disclosing the potential influence of performance incentives on investment strategy is the key aspect that embodies the essence of transparency in these arrangements.