What is the primary function of Know Your Product (KYP) in the sales process?

• A. Guarantees the fund will outperform benchmarks.
• B. Helps determine the final tax outcome for the client.
• C. Ensures the product is suitable for the client’s risk tolerance, investment objectives, and time horizon before recommending it.
• D. Replaces the need for a prospectus.

Answer: (C)

Know Your Product is about making sure any investment being considered truly fits the client’s ability to handle risk and their goals. The key function is to confirm that the product’s risk level, expected objectives, and time horizon align with the client’s risk tolerance, investment objectives, and time frame before a recommendation is made. This helps ensure the advisor is offering something appropriate for the client and provides a documented rationale for the recommendation. It does not guarantee performance, determine tax outcomes, or replace the need to review a prospectus.