Welcome to Customer Investment Profile: the unit that turns everything you learn about a customer, their money, their goals, and their tax situation into the single record every recommendation has to fit.
Exam Weight: 3 scored items within Function 2 (9 items / 18% of exam)
What You'll Learn
In this unit, you'll cover:
- Gathering the Customer's Investment Profile: the facts the suitability rule and Regulation Best Interest both require a representative to obtain, including the open catch-all for anything else the customer discloses, and the reasonable-diligence duty to obtain them
- Financial Factors in the Investment Profile: the five financial factors covering the customer's security holdings, other assets and liabilities, annual income, net worth, and tax considerations
- Personal and Situational Factors: further factors covering the customer's life circumstances, from age and dependents to employee stock options and insurance
- Investment Objectives: the four objectives the outline names, from preserving capital to speculation
- Tax Consequences of Securities Transactions: how basis, holding period, dividends, and interest income are taxed, and how basis is identified across multiple lots
- Verification of Accreditation and Sophistication: how much proof the rule demands, which turns on whether the offering was advertised, and which party owes the duty
- Form CRS Content and Delivery Timing: what the relationship summary must contain and when a firm must deliver it
Why This Matters
Every recommendation rests on the investment profile built before it. A representative who misreads an objective or delivers Form CRS late has broken a documented, testable requirement, not just a best practice. Skipping a profile factor is a violation too, unless the firm has a reasonable basis, documented with specificity, that the factor is not relevant to this customer.
Tax consequences and investor verification round out the profile: they are facts a representative gathers and confirms alongside age, income, and objectives, not separate topics from a different part of the exam.
Let's start with the facts that make up the customer's investment profile.