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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Operational Aspects of Investment Management

In the operations of an investment adviser's client servicing, what is the main purpose of maintaining a 'know your client' (KYC) record before commencing advice?

KYC records are maintained to establish and verify the client's identity and details, which supports compliance with anti-money laundering requirements before advice begins. They are not meant to guarantee returns, transfer custody of securities, or set advisory fees.

  1. ATo establish client identity and verify details for compliance with anti-money laundering normsCorrect
  2. BTo guarantee a minimum return to the client
  3. CTo transfer the client's securities to the adviser's custody
  4. DTo fix the advisory fee at a standard market rate

Explanation

KYC requires verifying the identity, address and other details of the client, which supports AML compliance. It does not guarantee returns, move custody of securities or fix fees. Advisers are required to complete KYC before onboarding a client.

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