Suitability refers to recommending and selecting investments that are sensible or “suitable” given personal factors such age, risk tolerance and overall investment objectives. As an example, if you’re 60 and about to retire, speculative investments and derivative products fail the suitability test. You can’t afford to lose money as you have relatively few years left to recoup the losses. In contrast, a 21 year old at the beginning of a long career can allocate some money to riskier investments that have potentially higher returns. In securities law, certain types of financial advisors such as stockbrokers or registered reps have to observe the “suitability” doctrine which requires that they should recommend only those investments that are “suitable” for their clients. This suitability standard does not imply that the broker must act in the best interest of their client or serve in a fiduciary capacity. A suitability standard is entirely different than a fiduciary standard.

Annuity Criticisms Often Boil-Down to Control of Assets


An Interview with Jack Marrion and John Olsen, Authors of Index Annuities: A Suitable Approach

Jack Marrion heads a research consultancy focused on the...


Survey Reveals High Levels of Confusion about Fiduciary Status

A survey conducted this past August confirms that consumers are confused by the different standards that apply to various types of financial advisors. 76 percent of the 1,319 survey respondents mistakenly believe that brokers are required to act as fiduciaries and serve the best interests of their clients.
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Exams and Suitability

An interesting article from Darla Mercado of Investment News discusses the NAIC's