A new client, Maria, has provided her financial advisor with information indicating she earns $80,000 annually, has liquid assets of $50,000, and states she wants to invest in high-growth funds with a 'moderate' risk tolerance. She is 35 years old and saving for retirement. Which of the following is the MOST appropriate next step for the advisor regarding KYC and suitability?

Question: A new client, Maria, has provided her financial advisor with information indicating she earns $80,000 annually, has liquid assets of $50,000, and states she wants to invest in high-growth funds with a 'moderate' risk tolerance. She is 35 years old and saving for retirement. Which of the following is the MOST appropriate next step for the advisor regarding KYC and suitability?

Answer options:

• Invest Maria's liquid assets into a diversified portfolio of growth-oriented mutual funds as requested. ✅ Obtain more detailed information about Maria's investment knowledge and experience, and clarify her understanding of 'moderate' risk.
• Explain that high-growth funds are aggressive and recommend a balanced fund instead.
• Have Maria sign a waiver acknowledging her choice of 'moderate' risk despite seeking high growth.

Correct answer: Obtain more detailed information about Maria's investment knowledge and experience, and clarify her understanding of 'moderate' risk.

Explanation: CIRO MFD rules require advisors to 'Know Your Client' (KYC) thoroughly. The term 'moderate' risk can be subjective, and further clarification is needed to ensure alignment between Maria's verbal risk tolerance and her stated desire for high-growth funds, as well as her understanding of the associated risks and investment experience.