Final answer:
The sales representative should review Mr. Richard's investor profile in light of the requested transactions to ensure they align with his goals.
Step-by-step explanation:
Under these circumstances, the sales representative should review Mr. Richard's investor profile to ensure that the requested transactions align with his investment goals, risk appetite, and current financial situation. Since mutual funds are professionally managed investment programs that offer the benefits of liquidity and the potential for diversified portfolios, it is important to assess whether transferring money from a money market fund to an equity fund and purchasing units of an income fund are congruent with Mr. Richard's long-term wealth accumulation strategy.
Mutual funds allow investors to take advantage of buying and selling size, thus reducing transaction costs. Considering Mr. Richard's history as a 'problem' client and his recent activity, it is also prudent for the representative to discuss the implications of these changes, including the different levels of risk associated with equity funds compared to money market funds and the potential for higher returns over time with stocks versus other investment options such as bonds or savings accounts.
Investors should be reminded that while high-risk investments may offer higher returns, there is also a greater chance of significant fluctuations in the short term. Therefore, aligning investment choices with one's stage in life and financial objectives is crucial. The representative can aid Mr. Richard in understanding these tradeoffs and help determine the best course of action to meet his personal financial goals.