It’s worth noting that the information gathered to know the client must be accurate, complete and up to date, since the obligation to know the client well is also verified by the quality of each file. As you know, it is perilous to make recommendations based on incomplete information. Despite this obvious fact, recent disciplinary decisions continue to show that this most important of our practices is not respected.

In one case handed down by the disciplinary committee³, an advisor was sanctioned for relying on information provided by his client six months earlier to persuade him to buy segregated funds and take out a loan. Of course, before making any recommendations, the advisor should have verified that the client’s financial situation was current and unchanged. 

Product knowledge: don’t overstep your bounds

Following a complementary logic, to ensure the suitability of a product for a client, you also need to know the products you offer inside out.

What’s involved? You should make every effort to understand the features of your product - including its advantages, drawbacks and risks - and be able to explain them clearly. Certain tax features or other special conditions of a product may not be suitable for some clients. Vigilance is essential.

The more complex a client’s situation, the more comprehensive the advisor’s expertise should be. For example, an advisor who does not have sufficient tax expertise should seek the assistance of a tax specialist in order to be able to offer the right product to a client whose situation is more complex and requires this type of expertise⁴. In this regard, it is strongly recommended that you obtain the necessary help or knowledge by consulting the appropriate specialists or by attending training courses to improve your knowledge. 

The Duty to Inform for an informed decision

In the final step, you’ll use the information you’ve gained from your Know Your Client and Know Your Product obligations and exercise your professional judgment to find products or strategies that are right for your client. Your analysis here should allow you to make a “diagnosis”. At this stage, you have a duty to inform your client of the important positive and negative factors associated with your recommendations in order to help them make an informed decision⁵. Moreover, your obligation is not limited to describing the recommended product; you must also explain to the client how the product offered meets the needs identified and ensure that your client has fully understood the explanations given⁶.

In addition, the duty to provide information must be modulated according to the client’s level of understanding. Although advisors are obliged to provide complete information to all their clients, the lower a client’s financial literacy, the more rigorous, accessible and detailed the information provided by the advisor must be, and the more important it will be for the client. In this regard, case law has emphasized that it is not enough for an advisor to simply hand out brochures describing a product in order to satisfy their suitability duty. The advisor must ensure that the client fully understands the specifics of a product, especially if they have relatively little experience and knowledge in the area⁷.

It’s no coincidence that your practice is governed by strict rules: your responsibilities are significant, and your clients need to be properly protected. As a certified professional, you have the skills and knowledge to provide sound advice to your clients. Your advisory role is invaluable in protecting the public.