When do these regulatory requirements come into effect?

Enhanced know-your-client (KYC), know-your-product (KYP) and suitability requirements come into effect December 31, 2021.

Where can I find current Fidelity product information to help meet my KYP obligations?

On the “Know your Fidelity product” hub page, you’ll find links to a range of materials to support your KYP requirements:

  • Find a Fidelity Fund: Up-to-date information on fund strategy, performance, benchmark, holdings, risk classification and portfolio manager.
  • Fund Facts/ETF Facts: Key information for the reporting period about each available ETF or mutual fund series, including fund codes, performance history, benchmark, holdings, risk ratings and fees associated with investing.
  • Regulatory reports: Updates on changes in portfolio manager strategy, factors affecting performance and market overviews for each reporting period can be found in the Management reports of fund performance (MRFPs).
  • About us: Information on Fidelity’s organizational structure, research capabilities, portfolio manager compensation and awards.

Materials can be printed using the ‘print’ icon at the top of each page. If you’re unable to find what you’re looking for within these links, reach out to your Fidelity Sales representative who can help direct you to additional resources.

What are the Client Focused Reforms, and how do know-your-product requirements fit in?

In collecting KYC information, advisors will need to have an in-depth conversation with a client, classified as a “meaningful interaction,” to get a better understanding of the client’s personal circumstances, financial circumstances, investment knowledge, risk tolerance and investment needs and objectives, as well as the client’s time horizon for investments. KYC factors need to be assessed by the advisor for overall reasonableness and consistency.

For KYP product suitability, advisors now have an obligation to have an in-depth understanding of the securities they are recommending and be able to explain clearly to the client the reasons a specific security is suitable and how it puts the client’s interests first.

As part of KYP, advisors are expected to understand the structure, features, liquidity, risks and initial and ongoing costs of a security, and the impact of those costs, sufficiently to meet the suitability determination before recommending the security to the client.

What guidance have the regulators provided?

Regulators have provided flexibility for registered firms to establish KYP processes that work for their business models, provided all the KYP requirements set out in NI 31-103 are met. If a firm would like to use its advisors to perform certain KYP functions, it would have to establish and oversee a KYP process that identifies the KYP activities to be carried out and designates the advisors as the individuals responsible for carrying out the specified activities on behalf of the firm. All KYP activities carried out on behalf of the firm should be documented, and the firm should have controls in place to ensure that the process is being followed, because the firm remains ultimately responsible for its advisors.

At this time, there is no prescribed period for a firm’s oversight or review of the activities of its advisors where a firm has set up this type of KYP process. Each firm should assess its own KYP process and determine the specific controls that are needed to ensure that its KYP obligations are being met.

What should I do if I want to learn more about Fidelity’s products and diversify my book of business?

We are continuing to look for ways to improve the way we support you with your KYP requirements. For now, we’ve linked any KYP-related information for our funds on the “Know your Fidelity product” hub page. As we learn more, we’ll improve the information we’re able to provide – and the ways we deliver it. If you’re unable to find the information you’re looking for, please reach out to your Fidelity Sales representative.