Master CIRE Element 6 covering client communications, required disclosures, relationship disclosure documents, and reporting requirements.
CIRE Element 6: Client Communication
Effective communication and proper disclosure are essential to maintaining compliant client relationships.
Relationship Disclosure Information (RDI)
Required Content
- Types of products and services offered
- Account fees and compensation
- Client's rights and firm's obligations
- Complaint handling procedures
- Potential conflicts of interest
Timing
- At account opening
- When there are material changes
- Upon client request
Pre-Trade Disclosure
Required Disclosures
- Conflicts of interest
- Compensation information
- Product risks
- Costs associated with the recommendation
Account Reporting
Required Reports
- Trade Confirmations: After each transaction
- Account Statements: At least quarterly
- Annual Reports: Annual fees and performance
- Position Cost Reporting: Book cost of positions
Performance Reporting
- Time-weighted vs. money-weighted returns
- Comparison to benchmarks
- Reporting of fees and their impact
Client Focused Reforms (CFR)
Key Requirements
- Know Your Product (KYP) obligations
- Suitability determination process
- Conflicts of interest management
- Enhanced disclosure requirements
Communication Best Practices
- Clear, plain language
- Written confirmation of verbal discussions
- Timely responses to client inquiries
- Document all significant communications
Key Exam Topics
- RDI content and delivery requirements
- Timing of various disclosures
- Account statement contents
- Performance reporting methods
- Documentation requirements
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