Know-Your-Client (KYC) & suitability

Fifteen terms to own

Term	Meaning
Client relationship model	The staged set of duties a dealer owes a client, from gathering information through recommending, acting, monitoring and reporting
KYC information	What you know about the client's circumstances, knowledge, objectives, constraints and horizon, held current
Risk tolerance	The amount of loss a client is willing to accept
Risk capacity	The amount of loss a client can absorb without wrecking their plans
Risk need	The return a client must earn to reach the stated goal
Material change	A change in the client's circumstances serious enough to require the record and the strategy to be revisited
Account appropriateness	Whether an account type and its features can properly serve this client at all
Suitability determination	Whether a specific investment action fits this client's documented information at that moment
Trusted contact person	Someone the firm may call about a capacity or exploitation concern, with no authority over the account
Temporary hold	A time limited restriction a firm may place on an account while it investigates a capacity or exploitation concern
Relationship disclosure document	The document describing the firm, the relationship, the charges, the conflicts and the client's rights
Information barrier	A control that stops confidential information moving between parts of a firm
Restricted list	The list of issuers in which the firm cannot trade or solicit because a conflict is live
Outside activity	Any business or role held beyond the dealer, requiring disclosure and written pre-approval
Personal financial dealing	A transaction between a representative and a client outside the ordinary course of business

Previous Next: One item from CIRO's practice exam