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What is the Suitability Standard?
The suitability standard states that a broker-dealer is obliged to, in the very least, make investment recommendations that are suitable for their clients.
The SEC defines a broker as someone who acts as an agent for someone else, and a dealer as someone who acts as a principal for their own account.
The suitability standard only details that the broker-dealer has to reasonably believe that any recommendations made are suitable for clients (in terms of the client’s financial needs, objectives and unique circumstances) instead of having to place his/her interests below that of the client. An example would be a broker recommending a proprietary bond fund for a client looking for a fixed income solution.
The bond fund is certainly suitable, so the broker is not breaking any rules, but he/she is only recommending that particular one because they earn a commission from its sale. This can incentivize brokers to sell their own products ahead of competing products that may be at a lower cost.
What Are the Contribution Limits For My Thrift Savings Plan?
Contribution limits for the TSP are the same as regular 401(k)s. An employee can defer up to $18,000 a year in 2016
What is the Difference Between a Will and a Trust?
A primary difference between a will and a trust is that a will goes into effect once you die, but a trust goes into...
What is a Charitable Remainder Unitrust (CRUT)?
A Charitable Remainder Unitrust (CRUT) is an irrevocable trust that donates a fixed percent to a charitable organization
What is Lifestyle Inflation?
Lifestyle inflation is the tendency of people to increase their spending and standard of living along with any $ raises
What is a Mortgage Short Sale?
A mortgage short sale occurs when a borrower and a lender settle for less than is owed on a mortgage, because of changes
How Do You Calculate Mining Profitability?
Mining for cryptocurrency may or may not be profitable for you, but the good news is that you can easily run the numbers
What is the security market line?
The Security Market Line (SML) is a visualization of the Capital Asset Pricing Model (CAPM) and shows thee relationship between risk and return in trading
What is foreign investment?
Foreign investment is the act of an individual, corp., or institutional investor, acquiring a large stake in a company
Is there such a thing as the “NFL effect?”
The “NFL Effect” suggests that the outcome of the Super Bowl can foretell market behavior
What is divergence analysis?
The analysis of divergence between indexes seeks to find leading indicators where there is confirmation of trends