Investment Objectives
Chapters in this video
- 0:00 Meet Riley the Rep and the suitability problem
- 0:59 The four objectives from preservation to speculation
- 2:27 Matching products to Carla's income goal
- 4:36 Why money market funds fail long-term growth
- 5:18 Spotting red-flag profile mismatches
- 6:28 Never override: discuss and document
- 7:21 Rapid-fire exam recap
What this video covers
- The four primary investment objectives (preservation of capital, income, growth, speculation) and where each one sits on the risk spectrum
- Why "growth and income" is a valid combined objective, and the trap that objectives are not mutually exclusive
- How to match suitable products to each objective: dividend stocks and investment-grade bonds for income, growth stocks and equity exchange-traded funds (ETFs) for growth, options and penny stocks for speculation
- Why suitability cuts both ways: a product can be unsuitable because it is too risky for a retiree OR too safe for a speculator
- Why a money market fund is the wrong answer for a long-time-horizon growth investor, thanks to inflation risk eating purchasing power
- How to spot red-flag mismatches: the 25-year-old picking preservation, the retiree picking speculation, the 2-year horizon paired with "aggressive growth"
- The golden rule when a stated objective conflicts with the profile: discuss the inconsistency with the customer, document the conversation, and never unilaterally override their choice
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