The welcome package
- 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 welcome package
The welcome package is the bundle of documents a new client receives. Each document answers a question a reasonable person would ask.
| Document | The question it answers |
|---|---|
| Fee schedule | What will this cost me |
| CIRO complaints brochure | How do I raise a problem with you, and what happens next |
| How CIRO protects investors | Who regulates you, and what does that mean for me |
| Opening an Investment Account | What have I just agreed to |
| Canadian Investor Protection Fund disclosure | What happens to my assets if the dealer fails |
| Derivative risk disclosure | What extra risk applies if I trade derivatives |
| Conflict of interest disclosures | Where might your interests differ from mine |
| Complaint handling procedures | What are your steps and timelines when I complain |
The pattern is worth seeing once. The package is not a legal pile. It is the firm telling the client the four things a client needs: cost, recourse, protection, and risk.
One distinction the exam likes. The Canadian Investor Protection Fund covers eligible client assets where a dealer becomes insolvent, within limits and subject to exclusions. It does not cover market losses, and it does not make a bad recommendation good. A client who believes the fund protects them from a falling market has been misled by someone, and the answer is to correct the belief.