Within this article we will describe the different steps that you have to take in order to complete the KYC questionnaire in your onboarding journey.
The main goal of the KYC questionnaire module is to identify:
Your financial situation
Your investment goal
Your knowledge and experience
Your risk appetite
At the end of the questionnaire you will then receive a personal investment proposal which takes into account your financial situation, goal, knowledge & experience and your risk appetite but more about this later.
First of all, let's continue your onboarding in the Blanco prospect portal. As you can see below, the client identification part is already completed and in case you would like to know more about this, then please refer to our article on "Natural person onboarding - 101". In this scenario we know all of your personal details, so let's find out more about your financial situation. Please click on "Start":
As you can see, the process is defined in the different steps as explained above. Please click on "Start" to begin with the "Financial Position" section:
Please complete the following steps to the best of your knowledge so that we have a good understanding of your financial position. Once completed you will see an overview of your assets and your "free to invest capital":
In this example the user has EUR 75K that he can invest freely (maximum).
Please click on "Continue" to start the second section where we would like to define your "Investment Objective":
Please select which investment objective best suits why you are investing:
You need to make a choice between four different objectives. These are:
Income: In case you want to supplement your current or future income then this is the objective you need to choose. You will be asked to define the date until which you would like to build up wealth after which you will start withdrawing money from your investment account until the final date.
Specific goal: Imagine you would like to invest money so that you can finally buy your dream car. You will invest until a certain date after which you will withdraw all your money at once.
Safety net: This investment objective is similar to the "specific goal" objective as it assumes a lump-sum withdrawal at the end of the investment horizon.
General investment: In case you are not interested in attaining a certain amount of money at a certain point of time but are simply interested in earning a 10% return on your investments then this is the goal you should select.
Based on the objective you have chosen, there could be some small differences in the questions you are asked but in general you will follow the same process. I have opted for the "Specific Goal" as I am still chasing my Ferrari.
Please complete all of the steps. At the end, you will again find an overview. In my case I would like to have a final amount of EUR 250000. To attain this I invest EUR 50000 upfront and I deposit an additional amount of EUR 250 per month
Next up, we are going to identify how comfortable to feel with risk. Please read this section carefully before continuing as it gives an in-depth explanation on the process and how you should interpret the risk based scenario's:
As mentioned in the text you will see that you get 6 scenario's that will be followed with 2 additional multiple choice questions. The outcome of this exercise will be your personal risk score on a range of 0 - 100. If you have a score of 0, then it means that you do not want to take ANY risk. On the other hand, if you would have a score of 100, then you are a person that is really risk loving and likes to take a gamble.
Please fill in the questions carefully as there are build in checks in the system which will identify if your answers are inconsistent. Below an example of a scenario question:
As mentioned, once completed you will get your personal risk score, which is 90 in my case. As you can see, there is also a bandwidth around my risk score which indicates the level of confidence. If my answers were totally inconsistent then this range would be much wider:
Let's move on to the last section, where we will identify your knowledge and experience around investing and the instruments in which you can invest. If, for example, you do not have any experience with investing in derivatives, then this is crucial information to know for your asset manager, as he would need to advise you on this or would simply not be allowed to invest in those assets for you.
Please complete all of the questions.
We now have all the information that we need in order to provide you with a personal proposal that is based on the offering of the asset manager at which you are investing your money.
The proposal consists of four pages:
Overview of your financial situation, goal and invested amount
An investment profile that is linked to the offering of the asset manager
Monte Carlo simulation: Based on your investment goal, initial investment, additional deposits and horizon you can see how likely it is that you attain your goal. In my situation, there is only a very small chance that I will reach my goal based on the information that I entered. If I would like to simulate what the impact would be of investing more money each month then I can change this parameter and the graph will automatically update itself:
Note: Based on your situation, the system will make an investment proposal for you, however, this does not mean that you cannot deviate from this in (certain cases). Just keep in mind the following situations:
If you indicated that not achieving the final goal has little to no negative effect on your future lifestyle in the ‘Investment Objective’ section, and you selected a profile that will not reach the minimum desired chance of achieving your goal in the section ‘Investment Objective’ as well, then you will be warned.
In case you indicated that not achieving your final goal has a negative or a very big negative effect on your future lifestyle, then you will not only be warned but you are also required to confirm that you wants to continue with a low-chance scenario in case you do not change the parameters.
If allowed by the entity at which you are onboarding yourself you could choose to deviate from the selected profile to a more defensive or offensive risk score. If you deviate from the proposed profile, another explanatory screen will show the changes. You are then required to confirm the change or indicate that you will maintain the proposed profile.
Finally, if you indicated that not reaching your goal will have a negative or large negative effect on a future lifestyle, and if the profile switch leads to a chance that is lower than your desired chance, you will not be able to switch to that profile.
If you agree on the proposal and wish to continue, then please click on "Next":
Finally, in case you have some questions for your asset manager, then feel free to specify them here. Otherwise, please click on "Submit" to finalise the process
As you can see we have now completed this section of the Onboarding process
Feel free to continue the process and, if shown, complete the "Additional Questions" section.