Exam CIFC Topic 1 Question 69 Discussion

Actual exam question for IFSE Institute's CIFC exam
Question #: 69
Topic #: 1

Which of the following Dealing Representatives has CORRECTLY fulfilled their suitability obligation?

A. Clarence determines that the Absolute Alternative Fund is suitable for all of his clients. Clarence believes that all investors need alternative funds in order to be properly diversified. B. Kiri recommends the Conservative Bond Fund to his client, Myrtle. The fund generates income and Myrtle's investment objective is "income" on her Know Your Client (KYC) form. C. Li Ming recommends the Venturex Labour-Sponsored Fund to her client, Park. While Park has low tolerance and capacity for risk, Li Ming provides detailed disclosure which explains the fund's risks. D. Roderik determines that the model portfolio he has developed will be suitable for all of his clients. Roderik has included investments with both income and growth to appeal to all investors.

Suggested Answer: B Vote an answer

Explanation
Kiri has correctly fulfilled his suitability obligation by matching the risk-return profile of the fund with the personal circumstances of his client. The Conservative Bond Fund is a low-risk, low-return fund that pays regular interest income to investors. Myrtle's investment objective is "income", which means she wants to receive steady income from her investments and preserve her capital. Therefore, Kiri's recommendation is reasonably suitable for Myrtle in all the circumstances. (Canadian Investment Funds Course, Chapter 2, Section 2.3) References:
* Canadian Investment Funds Course, Chapter 2, Section 2.3: Conflicts of Interest
* IFSE Institute: Suitability Obligations1
* SFC: Frequently Asked Questions on Compliance with Suitability Obligations2

by Elliot at Mar 19, 2025, 03:01 PM

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