Suitability Framework for Products and Services

What this video covers

• Why reasonable-basis suitability is a firm-level product-approval requirement, and why the violation attaches the moment the recommendation is made rather than when the customer loses money
• How documented due diligence by the new-product review committee creates the reasonable-basis record, and why even perfect customer fit cannot save an undocumented product
• What belongs in the customer investment profile (age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, risk tolerance) and why rep-by-rep training is mandatory
• The difference between customer-specific suitability (trade-by-trade) and quantitative suitability (pattern-based), and why quantitative does not require any single unsuitable trade
• How turnover rate, cost-equity ratio, and in-and-out trading function as the three core exception-report metrics for quantitative surveillance
• Why heavy-compensation products (variable annuities, direct participation programs (DPPs), Class B and Class C mutual funds) demand heightened quantitative scrutiny
• What constitutes a breakpoint sale and why spreading purchases just below a discount threshold is a collective quantitative-suitability violation even when each trade passes customer-specific review