Before providing you with advice, investment advisors must meet the requirements of the “Know Your Client” (KYC) rule to ensure their advice is suitable for you.
At your first meeting, your investment advisor will ask for your:
- Marital status
- Age – your date of birth
- Occupation – if you are retired, your occupation before you retired
- Income – your annual income from all sources, including employment income and investment income
- Net Worth – an estimate of your total assets less your total liabilites
- Number of dependants
- Risk tolerance: your willingness to accept investment risk and your ability to withstand financial losses
- Investment objectives: why you are investing or what you intend to use your investments for
- Investment knowledge and experience: your knowledge of investing, investment products and the associated risks
- Time horizon: how long you expect to keep the majority of your account invested to reach your investment objectives
Your investment advisor will need to know whenever you have a change in your personal circumstances, such as a meaningful change in employment, income, assets, liabilities, marital status or family situation. Ensuring that your KYC information is up-to-date and accurately reflects your personal situation will help your investment advisor provide you with suitable advice.
The Mutual Fund Dealers Association of Canada has created a fact sheet that outlines all of the information your investment advisor needs to open your account.
The Investment Industry Regulatory Organization of Canada also has a brochure that outlines what your investment advisor needs to open your account and why.
Original post by IFIC: https://investorcentre.ific.ca/the-know-your-client-rule/