Knowing Your Client (KYC) is the cornerstone of the relationship you have with your client and lays the foundation from which you can assist them in planning for their insurance, investment, and retirement needs. As an advisor, it is your fundamental responsibility to ensure that each recommendation made is suitable for the client and in keeping with the client's needs, objectives, and risk tolerance. In order to meet this obligation, you must obtain and maintain complete, timely, and accurate KYC information. KYC is not a requirement for your investment clients only.
 
It is also your fundamental responsibility to know the products (KYP) and only recommend products that are suitable for your clients based on the information you have gathered (KYC) and investment profile. No evidence of your review of client circumstances to support suitability of sale may result in your financial loss in the event of a complaint or legal issue.
 
Best Practices

• Engage in meaningful KYC discussions with clients and consider the use of a standard questionnaire to facilitate the collection and documentation of client information in all files. When possible, meet with clients face-to-face and ask detailed questions to assist in determining the needs of the client, as well as understanding their risk tolerance and objectives.
  
  
• Before products are selected, the potential product should be reviewed to ensure it meets the coverage needs of the client and would fit into the client’s budget. Proposed investment products should first be reviewed to ensure it meets a client’s investment objectives and, if so, should then be evaluated from a risk perspective to ensure that it falls within a client’s risk tolerance level. It is a good practice to separate investment objectives from risk tolerance.
  
  
• Paper the selection process by maintaining copies of the illustrations, which were reviewed with the client.  Clearly note which recommendation your client chose. Document which recommendations your client did not choose and why. Follow through with a letter to the client, which summarizes the recommendation made, the options chosen, and invites the client to revisit your recommendation when their circumstances will allow.
  
  
• Periodic (annual, where possible) meetings with clients to review insurance needs and investment portfolios, and determine if the KYC information in your file needs to be updated with material changes. The obligation is to ask if there have been any material changes pertaining to long term planning/goals, unforeseen circumstances, such as job loss, divorce, health, etc., additions to the family, and education costs, inheritances, etc.
  
  
• Maintain professional quality notes – complete, current, correct, and consistent. Keep comprehensive notes of your discussions with clients, both at time of sale and all subsequent meetings/conversations, to demonstrate how your recommendations met the needs of the client at that time and how risk tolerance, objectives, and time horizon was established.

• Obtain client-signed acknowledgement of any fees or risks affiliated with product recommendations to demonstrate discussions and client acknowledgement of DSC fees, the risks associated with leveraging, borrowing from whole life policies, rates of return are not guaranteed in universal life contracts and investment vehicles, etc. 

 
Remember, 
Good Business is Compliant and Compliance Matters!