CIRE ELEMENT 3

What is the primary focus of CIRE Element 3?

The Scope of Client Relationships.

What is the primary role restriction of an Investment Representative (IR)?

They can execute trades but cannot provide investment advice.

What is the primary role capability of a Registered Representative (RR)?

They can execute trades and provide legal investment advice.

What does the acronym KYC stand for under CIRO rules?

Know-Your-Client.

What does the acronym KYP stand for under CIRO rules?

Know-Your-Product.

What is the fundamental purpose of the KYC rule?

To understand a client's financial situation

What is the fundamental purpose of the KYP rule?

To understand the structure

When must an RR conduct a complete suitability assessment?

Before any recommendation is made to a client.

What is an unsolicited order?

A trade initiated entirely by the client without advisor recommendation.

What must an RR do if an unsolicited order is deemed unsuitable?

Warn the client

Can an Investment Representative (IR) accept unsolicited orders?

Yes

What is a Trusted Contact Person (TCP)?

A resource for firms to help protect vulnerable clients from financial exploitation.

Does a Trusted Contact Person (TCP) have trading authority over an account?

No

What document must be on file before an RR can manage a discretionary account?

A signed Discretionary Account Agreement approved by a Branch Manager.

Name three mandatory pieces of information collected in a KYC profile?

Client occupation

What personal event would immediately trigger a mandatory KYC update?

A significant life change

For a joint account with two spouses

whose identity must be verified?

If a client wants to change their objective from conservative to aggressive

what is triggered?

What is the core difference between retail and institutional clients?

Institutional clients have higher assets and lower regulatory suitability protections.

True or False: Accounted profit guarantees immediate cash on hand.

False

What document states a firm's assets

liabilities

What is the accounting equation used for a balance sheet?

Assets = Liabilities + Equity.

What does an Income Statement track over a specific period?

Total revenues

Define liquidity in client portfolio construction?

The ease and speed with which an investment can be converted to cash.

What is net income?

Final profit remaining after deducting all expenses

Why are non-cash expenses like depreciation tracked on financial statements?

To accurately account for asset wear over time without affecting cash flow.

Who must approve a client's discretionary trading authority profile at a dealer firm?

The Branch Manager.