FINRA Rule 2111: Quantitative Suitability

Welcome to the third and final part in our series on the three main suitability obligations outlined in FINRA Rule 2111 (Suitability). As with our earlier posts, “FINRA Rule 2111: Reasonable-Basis Suitability” and “FINRA Rule 2111: Customer-Specific Suitability”, we will begin with a brief overview of the three main suitability obligations imposed on broker-dealers and their associated persons; then, this particular blog will focus in on Quantitative Suitability.

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FINRA Rule 2111: Customer-Specific Suitability

This post is the second in our three-part series on the three separate and distinct suitability obligations outlined in FINRA Rule 2111 (Suitability). As with our previous post, “FINRA Rule 2111: Reasonable-Basis Suitability”, we will begin with a brief overview of the three main suitability obligations imposed on broker-dealers and their registered representatives; then, this particular blog will focus in on Customer-Specific Suitability.

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FINRA Rule 2111: Reasonable-Basis Suitability

Although suitability is a well-established principle within the securities industry, broker-dealers and their registered representatives sometimes forget that FINRA Rule 2111 (Suitability) has three separate and distinct suitability obligations. We will begin with an overview of all three main suitability obligations. Then, we will be going in-depth on these areas across three different blogs; this particular blog will focus in on Reasonable-Basis Suitability.

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FINRA Rule 2111: Getting to Know Your Client

Suitability is one of the most important concepts for an investment professional to understand.  Before an investment professional can make recommendations or decisions on behalf of an investor, he must understand what investments are suitable for the investor’s account.  The purpose of FINRA establishing the suitability standard, FINRA Rule 2111, is so that brokers deal fairly with their customers.  FINRA Rule 2111 states that firms and their associated persons “must have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer.” Read More…