What does suitability assessment involve?

Suitability assessment is a comprehensive process that evaluates a client's financial situation, investment goals, risk tolerance, and other relevant factors to ensure that investment recommendations are appropriate for them. By considering a client's financial situation, such as income, expenses, assets, liabilities, and overall financial health, a representative can better understand what types of investments may be suitable. Additionally, understanding a client's investment goals—whether they are focused on growth, income, capital preservation, or something else entirely—is critical to providing personalized and effective investment recommendations.

This holistic approach ensures that investment strategies align with a client’s unique circumstances and objectives, facilitating informed decision-making that reflects their needs and preferences. Evaluating only a client’s risk tolerance, focusing solely on past investment returns, or providing recommendations without client input would not adequately capture the breadth of information necessary to conduct a proper suitability assessment.