A client asks for a product that does not fit their risk tolerance; how should you respond?

• A. Ignore the mismatch and proceed with a high-risk product.
• B. Document the mismatch but proceed without alternatives.
• C. Explain mismatch, present alternatives, document the discussion, and obtain consent for a plan aligned with tolerance.
• D. Refuse to engage and end the conversation.

Answer: (C)

When a client’s request doesn’t match their risk tolerance, the essential step is to keep the client’s interests first by explaining why the proposed product is not suitable for them and what higher risk could mean for their portfolio. You should clearly outline the mismatch, discuss the potential impact in plain terms, and then present alternatives that align with their tolerance. Document the discussion, the client’s stated risk level, the alternatives considered, and obtain explicit consent to a plan that stays within their tolerance, with a plan to review later if circumstances change. This approach protects the client, supports responsible advisement, and helps avoid misalignment and regulatory risk.