CSC Working with Retail Clients 3

Question 1

What does the 'suitability' obligation require an advisor to assess when recommending an investment?

Accepted Answer

Whether the investment aligns with the client's KYC profile including objectives, risk tolerance, and time horizon

Answer

Suitability requires advisors to ensure that any recommendation is appropriate given the client's individual financial circumstances, objectives, and risk profile.

Question 2

A client has a registered account and a non-registered account with the same advisor. How should suitability be assessed?

Accepted Answer

Suitability must be assessed for each account separately

Answer

Each account has its own purpose and may have different objectives, so suitability must be assessed separately for each account.

Question 3

When must an advisor update a client's KYC information?

Accepted Answer

Whenever there is a material change in the client's circumstances or at minimum periodically as required by regulation

Answer

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.

Question 4

What is a 'discretionary account' in the context of retail clients?

Accepted Answer

An account where the advisor has authority to make investment decisions without prior client approval for each trade

Answer

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.

Question 5

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?

Accepted Answer

An unsolicited order

Answer

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.

CSC - Canadian Securities Course Practice Test

CSC - Canadian Securities Course Practice Test

CSC Working with Retail Clients 3