The relationship disclosure document
- 1. Know-your-client (KYC) & Suitability
- Calculators and Scratch Paper
- The Relationship the Rules Describe
- Clients Who Live Somewhere Else
- What KYC Has to Cover
- Tolerance, Capacity and Need
- Business Structures and Why They Change the Answer
- Writing It Down, and Having the Client Confirm It
- The Trusted Contact Person, and the Temporary Hold
- Who Owns KYC, and How Current It Has to Be
- What the Client File Holds
- Account Appropriateness
- The Account Types You Have to Compare
- What the Account-opening File Needs
- The Relationship Disclosure Document
- Keeping Confidential Information Contained
- The Welcome Package
- Product Due Diligence and Knowing the Product
- The Suitability Determination
- Unsolicited and Unsuitable Instructions
- Investment Actions
- Why Appropriateness and Suitability Are Separate Tests
- Monitoring, Triggering Events and Change
- Conflicts of Interest
- Outside Activities
- Personal Financial Dealings with Clients
- Standards of Conduct
- A Client, Worked End to End
- Twelve Ways to Lose Marks on This Element
- Fifteen Terms to Own
- One Item From CIRO's Practice Exam
Know-Your-Client (KYC) & suitability
The relationship disclosure document
The is the plain answer to the question "what have I signed up for". It describes the firm, the nature of the relationship, the products and services on offer, the charges, the conflicts, and the client's rights, including how to complain.
Four things the syllabus asks about.
Objective. Give the client what they need to understand the relationship and make an informed decision about entering it.
Frequency. Before or at the point the relationship begins, and again when there is a material change to the relationship or the information it contains. A firm that changes its fee structure has a on its hands.
Form and format. Clear, understandable, in a format the client can keep. Plain language is the substance here, not a courtesy. A disclosure document that requires a second read to be understood has failed at the only thing it was for.
Content and review. The document is reviewed and kept accurate. A stale disclosure misleads in the same way a stale KYC record does, and for the same reason.