A mutual fund representative is reviewing a client file and notices that the client's risk tolerance questionnaire was last updated five years ago, despite the client's personal circumstances having changed significantly (e.g., retirement, new inheritance). What is the representative's BEST course of action regarding the KYC information?

Question: A mutual fund representative is reviewing a client file and notices that the client's risk tolerance questionnaire was last updated five years ago, despite the client's personal circumstances having changed significantly (e.g., retirement, new inheritance). What is the representative's BEST course of action regarding the KYC information?

Answer options:

• Assume the previous risk tolerance is still valid and proceed with existing investment strategies.
• Ask the client if they feel their risk tolerance has changed in a casual conversation. ✅ Proactively schedule a meeting with the client to update their KYC information, including risk tolerance and investment objectives.
• Wait for the client to initiate contact and request a KYC update themselves.

Correct answer: Proactively schedule a meeting with the client to update their KYC information, including risk tolerance and investment objectives.

Explanation: Representatives have a continuous obligation to ensure KYC information is accurate and up-to-date, especially after significant life events. Proactively scheduling a meeting ensures compliance and maintains suitability.