Which document is typically required to demonstrate client suitability and obtain consent?

Which document is typically required to demonstrate client suitability and obtain consent?

• A. KYC data
• B. Investment policy statement
• C. Tax returns
• D. Performance reports

Answer: (A)

Onboarding hinges on collecting accurate client information to judge what fits. Know Your Client data captures identity, financial situation, investment objectives, time horizon, liquidity needs, and risk tolerance, which together show whether a proposed strategy aligns with the client’s goals. This information also supports obtaining informed consent for the advisory relationship, including understanding and agreeing to the risks involved. An investment policy statement is typically created after suitability is established and documents agreed-upon objectives and constraints rather than serving as the initial proof of suitability or consent. Tax returns inform tax planning rather than suitability, and performance reports reflect past results rather than current fit or authorization.

Onboarding hinges on collecting accurate client information to judge what fits. Know Your Client data captures identity, financial situation, investment objectives, time horizon, liquidity needs, and risk tolerance, which together show whether a proposed strategy aligns with the client’s goals. This information also supports obtaining informed consent for the advisory relationship, including understanding and agreeing to the risks involved. An investment policy statement is typically created after suitability is established and documents agreed-upon objectives and constraints rather than serving as the initial proof of suitability or consent. Tax returns inform tax planning rather than suitability, and performance reports reflect past results rather than current fit or authorization.