Investing 101
Duty to Know Your Product (KYP)
"Know Your Product" is used in the investment industry (securities) to refer to the responsibility of investment firms to understand the financial products they are offering to their clients.
Financial advisors and dealers must also make sure that they have a good understanding of the financial products they offer to investors. Often fin
"Know Your Product" is used in the investment industry (securities) to refer to the responsibility of investment firms to understand the financial products they are offering to their clients.
Financial advisors and dealers must also make sure that they have a good understanding of the financial products they offer to investors. Often financial advisors substitute promotional materials and sales pitches for this duty - and, as a result, recommend unsuitable products that offer the financial advisor incentives.
The financial advisor must independently investigate and understand the risks and benefits of each investment, as well as any fees or charges associated with them.
By having a thorough understanding of the investments that they offer, financial advisors and dealers can make sure that they are recommending suitable products to their clients.
This helps to protect investors from investing in products that are not suitable for their needs, which can result in financial losses.
Note that the KYP duty is directly connected with the KYC duty as combined in the duty of financial advisors and dealers to make sure that all recommendations and holdings in your accout are "suitable."