Customer-Specific Factors Affecting Security Selection

What this video covers

• The Regulation Best Interest (Reg BI) care obligation and why a representative must have a reasonable basis for every recommendation
• The four pillars of an investment profile: risk tolerance, time horizon, objectives, and liquidity needs, and why all four must be weighed together
• The objectives ladder from preservation of capital, to current income, to growth, to speculation, and the securities that match each rung
• Why growth and speculation are not the same objective, so a growth investor is not automatically suitable for options or penny stocks
• Why preservation of capital does not mean zero return, since U.S. Treasuries and money market funds still pay interest as a secondary benefit
• The rule of the restrictive: a short time horizon or high liquidity need overrides a stated aggressive risk tolerance
• Why liquidity is about speed of conversion to cash, not the dollar size of the investment