A mutual fund representative is conducting a Know Your Client (KYC) interview with a new client, David, who is 45 years old, married with two young children, and is the sole income earner for his family. During the discussion, David mentions he has no life insurance. What is the representative's ethical and professional obligation regarding this information?

Question: A mutual fund representative is conducting a Know Your Client (KYC) interview with a new client, David, who is 45 years old, married with two young children, and is the sole income earner for his family. During the discussion, David mentions he has no life insurance. What is the representative's ethical and professional obligation regarding this information?

Answer options:

• Suggest that David purchase mutual funds designed for retirement planning. ✅ Refer David to a licensed insurance professional to assess his life insurance needs.
• Advise David that life insurance is generally unnecessary at his age.
• Focus the discussion solely on investment products as per the representative's license.

Correct answer: Refer David to a licensed insurance professional to assess his life insurance needs.

Explanation: While a mutual fund representative cannot sell insurance, they have a professional obligation under Client-Focused Reforms to identify client needs that fall outside their direct product offering and refer them to appropriate professionals, ensuring a holistic financial plan.