Exam Weight: ~7 questions (5.4% of exam)
Before recommending an investment strategy, an adviser must make a reasonable inquiry into the client's objectives and financial situation, scaled to the client and the complexity of the advice. This unit covers what information to gather, how to assess it, and how it shapes suitable recommendations.
What You'll Learn
- The six standard investment objectives and how to resolve conflicting goals
- Cash flow, balance sheet, tax situation, existing investments, and Social Security/pension income
- Risk capacity versus risk willingness and what to do when they conflict
- ESG investing, behavioral finance biases, and life events
- KYC obligations, CIP requirements, and interview techniques
- Short, medium, and long-term horizons, multiple concurrent horizons, and the "to vs. through" distinction
- The adviser's fiduciary standard compared with broker-dealer suitability, and the Uniform Prudent Investor Act for trust accounts