Suitability Study Flashcards
When a customer asks for preservation of capital or principal protection
Money markets (Money Market Fund), U.S. Government Debt, and Investment grade bond.
Never choose - Hedge fund, Penny stock, Junk bond, Long option.
When a customer asks for current income or regular income
Bond (Bond mutual fund), Preferred stock, Blue-Chip stock, REIT.
Never choose - Zero coupon bond, long option, penny stock, income bond.
When a customer asks for monthly income
GNMA/FNMA/FHLMC or CMO bond. Money market mutual fund or variable and fixed annuity.
Never choose - Zero coupon bond, long option, penny stock, income bond.
When a customer asks for capital appreciation or capital growth
Common stock, stock mutual fund, ETF, Raw land and new construction DPP.
Never choose - Short option, money market, bond, preffered stock.
When a customer asks for aggressive growth or speculation
Hedge fund, leveraged ETF, sector mutual fund, speculative DPP program.
Never choose - Money market, money market mutual fund, investment grade bond, preferred stock.
When a customer asks for tax advantaged or tax sheltered. Is in a high tax bracket or high earner.
Muni Bond, stock with qualified dividends, DPP, IRA, variable annuity or fixed.
Never choose - Private purpose muni bond, GNMA/FNMA/FHLMC bond, corporate bond.
When a customer asks for liquidity or need to access money
Mutual fund, money market, listed stock, U.S. Government debt.
Never choose - Penny stock, hedge fund, Bank CD, DPP, structured product.
When a customer asks for high yield income
Corporate bond, blue chip stock, preferred stock
Never choose - Money market, investment grade muni bond, U.S. Government Bond.
When a customer asks for savings for a future life event
Zero-coupon bond, college savings plan/ESA, IRA, lifecycle mutual fund, savings bond, HSA.
Never choose - GNMA/FNMA/FHLMC bond, CMO bond, income bond, short option, speculative issues.
When a customer asks for something that with keep pace with inflation
Common stock, TIPS, stock mutual fund.
Never choose - Long term fixed income, fixed annuity.
