Analyzing Your Client's Financial Profile - Non-Financial Considerations

A number of non-objective issues can affect what investments and strategies are appropriate for a particular investor:



  • Investor knowledge and sophistication
  • Client values
  • Client demographics

Exam Tips and Tricks
Consider this sample exam question:



  1. The risk tolerance of the client is NOT a factor to consider when making investment recommendations to which client type(s):
    1. Trusts
    2. Estates
    3. Limited partnerships
    4. Accredited investors
    1. IV only
    2. I and II only
    3. I, II, III & IV
    4. None of the above
The correct answer is "d": risk tolerance must be considered for all investors, even institutional ones.
Introduction


Related Articles
  1. Professionals

    Risk Tolerance and Non-Financial Considerations

    NASAA Series 65: Section 11 Risk Tolerance and Non-Financial Considerations. In this section discusses client's risk tolerance and other aspects of clients.
  2. Professionals

    Additional Information

    FINRA/NASAA Series 66: Section 8 Additional Information. In this section additional information on IA registration with sample questions.
  3. Professionals

    Suitability Factors

    FINRA Series 6: Section 9 Suitability Factors. In this section Financial Status of Clients, Client Type, Partnerships, Corporations, Current Status, Emergency Insurance, Current Investments, ...
  4. Professionals

    Practice Questions 10 - 13

    Practice Questions 10 - 13
  5. Financial Advisors

    Tips for Assessing a Client's Risk Tolerance

    Determining a client’s risk tolerance is a critical piece of the puzzle in designing and appropriate asset allocation.
  6. Professionals

    Sample Questions 1 - 3

    Sample Questions 1 - 3
  7. Professionals

    Coverdell Education Savings Accounts

    FINRA/NASAA Series 66: Section 4 Coverdell Education Savings Accounts. In this section Coverdell Education Savings Accounts (ERA) and related sample questions.
  8. Professionals

    Sample Questions 5 - 8

    Sample Questions 5 - 8
  9. Financial Advisors

    Pro Tips on Evaluating Clients' Risk Tolerance

    Want to keep clients longer? Bolster your risk assessment capabilities.
  10. Financial Advisors

    Advisors: Revisit Your Client's Risk Assumptions

    Financial advisors should avoid generalizing a client’s risk tolerance based on their age or other demographics.
RELATED TERMS
  1. Blanket Recommendation

    A situation in which a financial professional or institution ...
  2. Know Your Client - KYC

    A standard form in the investment industry that ensures investment ...
  3. Client Base

    A company's primary source of business. A client base consists ...
  4. Investment Manager

    A person or organization that makes investments in portfolios ...
  5. Accredited Investor

    A term used by the Securities and Exchange Commission (SEC) under ...
  6. Account Executive

    This term refers a person who has primary responsibility for ...
RELATED FAQS
  1. Which of the following signatures are required on a client’s new account form ... ...

    The correct answer is B. While local practices of a broker-dealer might require the client to sign the form, even when opening ... Read Answer >>
  2. Which of the following statements is (are) true with respect to setting the proper ...

    The correct answer is: d) Choice II is incorrect because the longer the investment horizon, the less emphasis must be placed ... Read Answer >>
  3. An advisor has all client advisory fees automatically deducted from their accounts ...

    The correct answer is c) An advisor is not deemed to have custody of client funds when debiting management fees from the ... Read Answer >>
  4. Which of the following are not types of open-end management investment companies ...

    The correct answer is d) Hedge funds are extremely aggressive entities that engage in margin and short-selling.  They are ... Read Answer >>
  5. Under the Uniform Securities Act, which of the following are defined as securities ...

    The correct answer is a. Fixed annuities are not considered securities, since the purchaser bears no investment risk. However, ... Read Answer >>
  6. Which statements about common shareholder rights are FALSE? I. A shareholder may ...

    The correct answer is a. I should be the the other way around: convertible bond holders can exchange their bonds for shares. ... Read Answer >>
Hot Definitions
  1. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  2. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  5. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  6. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
Trading Center