Definition of Suitability

Suitability is a determination that the characteristics of a security are in line with an investor’s objectives, financial profile, and attitudes.

Applying "Suitability" to Securities Exams:

All agents of broker dealers and investment advisers must make sure that the securities that they are recommending to their clients are in line with the clients’ goals and risk tolerances. Even if an investor realized a profit on the purchase and sale of the security the purchase of a that security still may not have been suitable for that investor.

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