Prospective Client Relationships, Client Classification, and Onboarding
Learn how the client relationship model, client classification, onboarding, KYC collection, and recordkeeping work together at the start of a CIRO-regulated client relationship.
Chapter 2 covers the beginning of the client relationship. It explains what the firm must disclose before the relationship is relied on, how the client should be classified, what information and authority documents must be collected, and why the onboarding file has to support later suitability, supervision, and complaint resolution from day one.
The chapter is best studied as a decision sequence. First, define the relationship clearly through disclosure, conflict handling, suitability logic, and reporting expectations. Second, classify the client properly and decide whether any institutional treatment, waiver, or exempt-market concept is actually available. Third, complete onboarding with defensible KYC, authority controls, cost disclosure, and records.
Most Chapter 2 exam questions are really next-step questions. The strongest answer is usually the one that identifies what is still missing from the relationship or the file before the firm proceeds.
Chapter snapshot
Item
What matters here
Indicative questions
11
Main skill
build a defensible relationship and onboarding file before acting
Typical trap
assuming the relationship is usable before disclosure, classification, or KYC is complete
Strongest first instinct
ask what is still missing before the firm can rely on the account or recommendation process
What this chapter is usually testing
whether you know what has to be complete before the relationship can be relied on
whether you can distinguish relationship setup, client classification, and KYC completion from later suitability analysis
whether you recognize when the file is still too weak for the next step
Common clue -> stronger answer direction
If the stem emphasizes…
Stronger answer direction
vague account purpose or incomplete client facts
pause and improve KYC first
institutional treatment, waivers, or exemptions
confirm eligibility before relying on special treatment
authority documents, signing authority, or power of attorney
solve the authority question before the product question
delivered disclosures but missing file evidence
treat the documentation gap as a real control problem
What this chapter is really testing
This chapter is testing whether you know how a client relationship becomes usable in practice. Stronger answers usually:
define the relationship and service model clearly
classify the client correctly before assuming any special treatment
notice whether missing forms, authority limits, KYC facts, or disclosure gaps make the next step premature
How to study this chapter well
read the chapter as one onboarding workflow instead of as isolated rules
keep client classification, authority, KYC, and cost disclosure connected in the same file-building sequence
treat exempt, institutional, or waiver concepts as exceptions that must be earned by the facts
ask what later suitability or complaint review would need to see in the file
What stronger answers usually do
stop the process when key onboarding evidence is still missing
separate relationship-definition problems from product or suitability problems
prefer the answer that improves file quality and client clarity before the firm proceeds
Review how the client relationship model governs disclosure, conflicts, suitability, reporting, and documentation at the start of the client relationship.