FINRA Rule 2111 requires that when brokers make a recommendation to a client that such recommendation is suitable. Below is a suitability checklist which encompasses the requirements of the rule.
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Suitability Checklist
Name of Representative: _______________________________
Name of Client: _________________________________________
Type of Account: _______________________________________
Date of Review: _________________________________________
1. Reviewed all personal information about the client including, age, occupation etc..
Yes: __ No: ___ Comments (if any) ___________________________________
2. Reviewed net income and net worth of the client and make sure there is awareness of all the client’s investments.
Yes: __ No: __ Comments (if any) ___________________________________
3. Reviewed the purpose of the account and considered whether it is long term, short term, etc.
Yes: __ No: ___ Comments (if any) ___________________________________
4. Reviewed overall investment objectives and investment time horizon of the client, ie., when the client expects to meet the financial goals set.
Yes:__ No: __ Comments (if any) ___________________________________
5. Reviewed whether investment objectives allow for speculation.
Yes: __ No: __ Comments (if any) ___________________________________
6. Reviewed Investment Risk Tolerance of the client ranging from conservative, moderate conservative, moderate, moderately aggressive and significant risk.
Yes: __ No: __ Comments (if any) ___________________________________
7. Reviewed the Financial Investment Experience of the client including experience with Mutual Funds/Exchange Traded Funds, Individual Stocks, Bonds, Options, Securities Futures, Annuities, Hedge Funds, Structured Products and Margin. Reviewed the length of time experienced in each of these products and the number of trades made per year.
Yes: __ No: __ Comments (if any) ___________________________________
8. Reviewed the Decision-Making patterns of the customer. Does the customer consult with his broker, investment advisor, CPA or other financial professional or does he or she generally make their own decisions or discuss investment decisions with family or friends.
Yes: __ No: __ Comments (if any) ___________________________________
9. Reviewed how much of the client’s portfolio will be comprised of this account.
Yes: __ No: __ Comments (if any) ___________________________________
10. Reviewed how the account will be funded: income, pension or retirement savings, funds from another account, gift, sale of business or property, insurance payout, inheritance, social security benefits, home equity line of credit/reverse mortgage or other.
Yes: __ No: __ Comments (if any) ___________________________________
11. Insured that all investments proposed were thoroughly explained and are suitable for the client in light of all the above considerations.
Yes: __ No: __ Comments (if any) ___________________________________
Notes:
________________________________________________________________
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