Chartered Investment Manager (CIM) Practice Exam · Question
According to Canadian regulatory guidelines, what is the 'Know Your Client' (KYC) obligation primarily designed to achieve?
The KYC obligation is a cornerstone of suitability. It requires advisors to gather comprehensive information about a client's financial situation, investment kn
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Question: According to Canadian regulatory guidelines, what is the 'Know Your Client' (KYC) obligation primarily designed to achieve?
Answer options: ✅ To ensure an investment adviser has sufficient information about a client to make suitable investment recommendations.
- To verify the client's identity for anti-money laundering purposes only.
- To estimate the client's potential tax liabilities from investment activities.
- To inform the client about the various investment products available on the market.
Correct answer: To ensure an investment adviser has sufficient information about a client to make suitable investment recommendations.
Explanation: The KYC obligation is a cornerstone of suitability. It requires advisors to gather comprehensive information about a client's financial situation, investment knowledge, risk tolerance, and investment objectives to ensure any recommendations made are appropriate and suitable.
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