You are collecting know your client (KYC) information for your new client, Yael. She has recently accepted an early retirement package from her…

A suitability analysis requires balancing all aspects of the client's situation. Although Yael states she is comfortable with high risk, her financial circumstances dictate a different need. She requires regular income from the investment to pay for essential monthly expenses. This need for income and capital preservation for that purpose overrides her stated risk tolerance. A mortgage fund is designed to provide a steady stream of income and is generally less volatile than equity funds, making it a suitable choice that directly addresses her primary financial objective. Equity funds are too risky, and a money market fund may not provide sufficient income.

A. A global equity fund is a high-risk growth investment and is unsuitable for a client who depends on the investment for essential income.
B. A money market fund is very low risk but typically provides a very low yield, which may not be sufficient to meet Yael's income needs.
D. A Canadian equity index fund is a high-risk investment focused on capital growth, not income, making it inappropriate given her financial dependency.

1. IFSE Institute, Canadian Investment Funds Course (CIFC), Part 2, Chapter 9: Knowing Your Client and Suitability, Section: "Assessing Suitability".

2. Canadian Securities Administrators (CSA). (2009). National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations, Part 13, Division 1: "Know your client and suitability".

3. IFSE Institute, Canadian Investment Funds Course (CIFC), Part 1, Chapter 3: Types of Investment Products, Section: "Income Funds".