A new client, Sarah, provides her advisor with the following information: age 35, annual income of $90,000, savings of $15,000 in a TFSA, 2-year investment horizon for a down payment on a house, and a low-to-medium risk tolerance. The advisor recommends investing $10,000 of her TFSA into a diversified portfolio primarily composed of Canadian small-cap growth equities. Which of the following regulatory requirements is most likely being overlooked?

Question: A new client, Sarah, provides her advisor with the following information: age 35, annual income of $90,000, savings of $15,000 in a TFSA, 2-year investment horizon for a down payment on a house, and a low-to-medium risk tolerance. The advisor recommends investing $10,000 of her TFSA into a diversified portfolio primarily composed of Canadian small-cap growth equities. Which of the following regulatory requirements is most likely being overlooked?

Answer options: ✅ The suitability requirement under Client-Focused Reforms.

• The Know Your Product (KYP) obligations.
• CIRO's ethical conduct standards for fair dealing.
• Client and account identification for anti-money laundering.

Correct answer: The suitability requirement under Client-Focused Reforms.

Explanation: Sarah's short investment horizon (2 years for a down payment) and low-to-medium risk tolerance make a portfolio primarily of small-cap growth equities unsuitable due to their higher volatility and risk, directly violating the suitability requirement to act in the client's best interest.