Clients, Suitability and Account Handling
This domain tests know-your-client discipline: collecting the right information, matching it to a product, and documenting the decision so it can be defended later.
Core rules
Collect identity, financial situation, investment experience, objectives, time horizon, risk tolerance and any restrictions at onboarding, and refresh them when circumstances change. Rate products consistently and compare the product rating with the client's profile. Suitability applies to solicited recommendations; execution-only handling reduces, but does not remove, duties such as anti-money-laundering checks, fair treatment and accurate order handling. Discretionary mandates need written authority and periodic review. Professional-investor status changes disclosure and solicitation rules but not the duty to act honestly.
Worked example
A client rated medium risk asks for a high-risk leveraged product after reading about it online. It is not suitable as a solicited recommendation. If the client insists, the firm may accept an unsolicited instruction after explaining the mismatch, confirming the client understands the risk, and recording the rationale. The firm should not upgrade the client's risk rating simply to make the sale.
Traps that cost marks
Treating onboarding as a one-off exercise; using a risk rating the client does not understand; assuming execution-only means no suitability or record-keeping duty; accepting a mandate change without signed authority.