Customer Investment Profile

Everything you gather about the customer, and the two checks that ride with it.

Which One-Liners Win Points?

• The nine named facts: age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, and risk tolerance, plus anything else the customer discloses. The list is open-ended.
• Reasonable diligence is owed on every fact. Skipping one takes a documented, specific reasonable basis from the firm or the representative.
• Regulation Best Interest (Reg BI) defines essentially the same retail customer investment profile, so only the rule name changes.
• Five financial factors: security holdings, other assets and liabilities, annual income, net worth, and tax considerations.
• Personal and situational factors are examples, not a closed list: age, marital status, dependents, employment, investment experience, home ownership, employee stock options, insurance, and liquidity needs.
• Four objectives: preservation of capital protects principal, income seeks steady current income, growth balances risk and return, and speculation accepts a high risk of losing principal.
• Basis is cost plus acquisition costs, adjusted over time. First in, first out is the default unless the customer identifies the lot by the earlier of settlement date or the settlement time set, with written confirmation. Where average basis can apply and nothing is elected, the broker's default method governs.
• Verification: a general-solicitation offering makes the issuer take reasonable steps with objective evidence, while a no-solicitation offering needs only a reasonable belief on the customer's representations.
• The customer relationship summary (Form CRS) reaches a new retail investor before or at the earliest of a recommendation, an order, or account opening, and again at a new account, rollover recommendation, or new brokerage service.

Which Numbers Matter Most?

Which Gotchas Trip Students Up?

• A customer cannot waive suitability and no agreement can disclaim it; only a documented, specific reasonable basis excuses a missing fact.
• Assessing the profile sits outside the suitability rule until a recommendation of a particular security rides along.
• Profile net worth is total assets minus liabilities, not the accredited-investor test that excludes the primary residence.
• Growth is not mild speculation: growth balances risk and return, speculation accepts a high risk of losing principal.
• Exactly one year is short-term; the holding period must exceed one year.
• Interest income is ordinary income, a qualified dividend needs a qualifying payer and the holding-period test, and the reasonable-steps verification duty belongs to the issuer even when the firm does the work.
• Form CRS is not one and done, its page limit is a maximum, a dual registrant may file two separate summaries, and it satisfies no part of the Reg BI disclosure duty.

One-Breath Recap

The investment profile is nine named facts plus an open catch-all, wanted alike by the suitability rule and Regulation Best Interest and gathered through reasonable diligence that no waiver can disclaim. Five financial factors, a longer list of personal circumstances, and one of four stated objectives fill it in, alongside tax mechanics where first in, first out is the default and long-term takes more than one year. Verification turns on the offering type, and the customer relationship summary goes out at the earliest of a recommendation, an order, or account opening, then again at each new trigger.

Need more than the recap? Read the full Customer Investment Profile unit.