If a client no longer meets the criteria of an elective professional, what must the firm do?

When a client no longer meets the criteria of an elective professional, the firm is obligated to notify the client of the change in categorization. This is important because the regulatory framework that governs financial services provides distinct levels of client categorization, which affects the level of protections and the types of advice or services that can be provided.

By informing the client about the change in their status, the firm ensures that the client is fully aware of their new classification and the implications this may have for their dealings with the firm. This notification allows the client to understand that they may not have access to the same level of services or regulatory protections as before, which is essential for maintaining transparency and trust.

Moreover, understanding their new categorization helps the client make informed decisions regarding their investments and financial management going forward. This process aligns with the firm's regulatory obligations to treat clients fairly and keep them adequately informed about their status.