Know your client

Know your client (KYC) rules are intended to protect investors and advisors. Investment Industry Regulatory Organization of Canada (IIROC) Dealer Member rules impose KYC and suitability requirements on Dealer Members and Registered Representatives.

Most investment firms are required to determine the suitability of each proposed transaction in your account. This applies whether or not the trades are the result of recommendations by the firm’s staff.

Determining suitability
To determine suitability, your firm and advisor need to fully understand your financial situation, investment needs, objectives, investing experience and tolerance for risk. These can only be assessed by collecting from you accurate information about your personal and financial circumstances. This requirement, part of the Know Your Client rule, is one of the cornerstones of securities regulation.

Information required
In order for your firm and advisor to comply with the Know Your Client rule, you will be asked to provide and keep up to date the following information:
 * martial status
 * date of birth (to determine age)
 * occupation, if you are retired, your occupation before you retired
 * income and net worth
 * number of dependents
 * risk tolerance, your willingness to accept investment risk and your ability to withstand financial losses
 * investment objectives, why you are investing or what you intend to use your investments for
 * investment knowledge and experience
 * time horizon, how long you expect to keep the majority of your account invested to reach your investment objectives