A client, Ms. Anya Sharma, aged 55, has a moderate risk tolerance but recently expressed a desire to take on more risk after seeing her friend's investment gains. Based on Ms. Sharma's financial situation and long-term goals, which of the following is the most appropriate action for her dealing representative?

Question: A client, Ms. Anya Sharma, aged 55, has a moderate risk tolerance but recently expressed a desire to take on more risk after seeing her friend's investment gains. Based on Ms. Sharma's financial situation and long-term goals, which of the following is the most appropriate action for her dealing representative?

Answer options:

• Immediately recommend a high-growth equity fund, as the client's stated desire for higher risk should be prioritized.
• Explain the risks associated with higher-growth investments and update the KYC information only if Ms. Sharma's financial circumstances have fundamentally changed.
• Update the KYC information to reflect a higher risk tolerance and recommend a corresponding high-risk mutual fund. ✅ Discuss her overall financial goals, current financial situation, and the implications of increased risk, and then update her KYC if the new risk tolerance is truly suitable.

Correct answer: Discuss her overall financial goals, current financial situation, and the implications of increased risk, and then update her KYC if the new risk tolerance is truly suitable.

Explanation: CIRO MFD rules require that the dealing representative ensure any recommendations are suitable based on the client's KYC information. A change in stated risk tolerance requires a thorough discussion and assessment of its appropriateness given their full financial picture before updating KYC and making new recommendations.