Working with Retail Clients Flashcards
7 cards from real CSC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Working with Retail Clients flashcards as text
What does the 'suitability' obligation require an advisor to assess when recommending an investment?
Answer: Whether the investment aligns with the client's KYC profile including objectives, risk tolerance, and time horizon
Suitability requires advisors to ensure that any recommendation is appropriate given the client's individual financial circumstances, objectives, and risk profile.
A client has a registered account and a non-registered account with the same advisor. How should suitability be assessed?
Answer: Suitability must be assessed for each account separately
Each account has its own purpose and may have different objectives, so suitability must be assessed separately for each account.
When must an advisor update a client's KYC information?
Answer: Whenever there is a material change in the client's circumstances or at minimum periodically as required by regulation
KYC must be updated when the advisor becomes aware of a material change in the client's circumstances and periodically to ensure the information remains current.
What is a 'discretionary account' in the context of retail clients?
Answer: An account where the advisor has authority to make investment decisions without prior client approval for each trade
In a discretionary account, the advisor has been granted authority to buy and sell securities on the client's behalf without obtaining approval for each individual transaction.
A retail client receives an unsolicited order form from a third party and brings it to their advisor to execute. What is this type of order called?
Answer: An unsolicited order
An unsolicited order is one that originates from the client rather than from the advisor's recommendation, and it may be executed even if it is outside the client's profile.
Which of the following best describes a 'managed account'?
Answer: A fee-based account where a portfolio manager has discretionary authority over investments
A managed account is a discretionary portfolio management arrangement typically fee-based, where a licensed portfolio manager makes investment decisions on behalf of the client.
Under Canadian securities regulation, what is the 'client-focused reforms' (CFRs) framework primarily designed to achieve?
Answer: To ensure that the interests of the client take priority over the interests of the registrant and firm
Client-Focused Reforms require registrants to prioritize client interests over their own when conflicts arise, including enhanced KYC, suitability, and conflict-of-interest obligations.