Before providing you with advice, financial advisors must meet the requirements of the “Know Your Client” (KYC) rule to ensure their advice is suitable for you.
At your first meeting, your financial advisor will ask for your:
- Marital status
- Income and net worth
- Number of dependants
- Risk tolerance: from low (which means you are willing to accept lower returns to ensure your money is safe) to high (which means you are looking for significant growth in your money, and you are willing to see your holdings drop in the short-term if it gives you a better chance of earning higher returns over time)
- Investment objectives: for example, you would like your investments to provide some income on a regular basis, even if that means your long-term growth is not as high. Or, you are looking for capital gains over time and you do not need the funds to provide you with income in the short-term.
- Investment knowledge and experience: from excellent to low or nil
- Investment time horizon: how long you intend to leave your money invested
Your answers to these questions will be written down and you will be asked to sign the form to confirm that the information is correct.
Your financial advisor might contact you from time to time to ask you to update the information and sign a new form. But don’t wait to be contacted. Let your advisor know whenever you have major life changes, such as changing jobs, getting married, buying a house, starting a family or losing a loved one.
Your answers will impact the advice that your financial advisor will provide to you. Ensuring that your profile is up-to-date and genuinely reflects your own priorities will help your advisor provide you with better client service and advice that is suitable for you.
The Mutual Fund Dealers Association of Canada has created a fact sheet that outlines all of the information your advisor will need in order to open your account.