Know Your Customer

What is Know your customer.?

Know your customer, in essence, is the set of rules and guidelines in the United States that strongly recommend that prior to dealing with a customer, the stock broker must first evaluate the client’s overall financial position as well as his or her other stockholdings.
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For a good broker, the knowledge of everything about the status quo in his client’s financial life, including investment horizon, bearing capacity, liquidity etc. can be of immense value. Such information can also help them sustain a healthy and mutually benefiting relationship with the client.

Just like a stock broker would generally know about his client, in the same way, an investor must also know about himself or herself adequately and thoroughly so as to have his/her investment priorities in place. Here, the client and the broker must discuss and reach a consensus about the acceptable level of risks in an investment and other similar important issues.

Edited and Updated 15th February 2014

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