A leading financial planner once said “the one thing we know is that whatever we plan for will not occur according to our plan”.
In everyone’s life, the best plans are merely a series of alternatives that allow us to respond to what occurs.
A financial advisor should only recommend Financial Strategies that plan for material changes in your circumstances.
Each person has a unique set of material changes. Clients marry, some divorce, some live in the many variations of spousal and support relationships. Some clients have children, some children have special opportunities and/or needs, some children get married, some never move out of the house. Some clients choose to take on obligations such as caring for parents and other family members or friends. Some clients lose their jobs without warning or their businesses or retire. Some clients have significant health challenges or need to care for the health challenges of others. Some clients just need to feel more secure as they mature. Each person, each client, has a unique set of material (important financial) changes that occur during the course of their relationship with their professional financial advisor.
The professional financial advisor is duty bound and obligated to make reasonable (not just occasional or cursory) efforts to explain to their clients the importance of reporting possible and/or actual material changes. Furthermore, as clients get caught up in their daily activities, the financial advisor has a duty to make reasonable and regular efforts to ensure that he/she knows the KYC facts of each client. This is a continuing and evolving obligation.
The only thing the financial advisor can be certain of is that failing to regularly and meaningfully conduct the KYC Process for each client will likely result in some clients’ Financial Strategies being inappropriate and, as a result, damages will occur.