Identifying Client Needs

Question 1

What is KYC and what does it mean?

Answer 1

know your customer, must keep abreast of clients’ circumstances not just prior to selling the product but also once sold – if anything changes might have to change advice.

Question 2

Who is the duty to do a KYC generally owed to?

Answer 2

advisory and discretionary retail and professional clients

Question 3

What is included in a suitability assessment in a KYC? And list assumptions on this

Answer 3

o Suitability assessment based on:
 Investment objectives*
 Financial situation
 Knowledge and experience**

o *Assumed that per se professional clients can financially bear investment risks consistent with his investment objectives unless services are discretionary portfolio management
o **assumed for professional clients

Question 4

What is churning and switching?

Answer 4

overtrading of customers’ accounts for the purpose of generating commission
o Churning: investments generally
o Switching: packaged products