A client, Mr. Henderson, informs his mutual fund representative that he is considering purchasing a new car and will need to withdraw a significant portion of his non-registered mutual fund investments. Which of the following is the most appropriate action for the representative to take regarding documentation?

Question: A client, Mr. Henderson, informs his mutual fund representative that he is considering purchasing a new car and will need to withdraw a significant portion of his non-registered mutual fund investments. Which of the following is the most appropriate action for the representative to take regarding documentation?

Answer options: ✅ Update the client's Know Your Client (KYC) information and document the reason for the withdrawal and the client's updated financial situation and risk tolerance.

• Process the withdrawal immediately as per the client's request without further documentation, as it's their money.
• Advise the client to reconsider the car purchase as it will reduce his investment portfolio.
• Document the transaction in the client's file but do not update the KYC, as the withdrawal does not change his long-term investment goals.

Correct answer: Update the client's Know Your Client (KYC) information and document the reason for the withdrawal and the client's updated financial situation and risk tolerance.

Explanation: Any significant change in a client's financial situation or investment objectives, such as a large withdrawal for a specific purchase, necessitates updating their KYC information to ensure ongoing suitability of their investments and proper documentation of their circumstances.