Broker Check

Suitability and Objectives

Your Investment Profile Statement (IPS) is the first step taken to find out what assets and asset allocation is suitable for you.  This IPS will help to ensure that your investment goals are tailored to you individually.

Advisors, because of their fiduciary duty or “prudent man rule”, are required to do an in depth “what’s best for my client” test before making any recommendations.  Many other financial professionals do not have this duty.  However, in July 2012, FINRA mandated that brokers are now required to ask about 5 areas of suitability before making any recommendations, (age, investment experience, time horizon, liquidity needs, and risk tolerance, among other required fact gathering data).

Suitability

Risk - Contact me and take your risk questionnaire.  Find out how you define and tolerate risk.  

Time Horizon - What is your timeline?  When will you need the funds, you plan to invest?

Debt to Income Ratio - Are you in debt?  What are your interest rates?  What are your liabilities?  How can you attempt to achieve a healthy debt to income ratio?

Emergency Fund - 3 to 6 months is a comfortable backup to hold in cash or liquid assets, low risk investments such as CD's or money market may be suitable for some investors.

Available Qualified Plans - Are you maximizing your employer sponsored retirement plan?  Are you maxing out these plans and want to invest additional money?  Are you a candidate who should consider an IRA or ROTH IRA?

Net Worth & Income - When you take your risk questionnaire these two factors will help you determine your suitable risk score.

Liquidity Needs - What is your time horizon and need for the funds you plan to save or invest?  Savings and investments that are easily made available for cash are the short-term vehicles which need to be available for you.  You need them for short-term expenses, emergency funds, or, to help follow a fixed plan with little room for asset price movement.

Investment Knowledge - What is your level of investment experience? What type of investments are you most familiar with and how long have you been investing in these investment types?

Investment Objectives and Goals

The following investment objectives are general examples only for each category.  As risk varies for each category, each should be considered carefully before investing. 

Preservation of Capital - Money Market or CD investment vehicles (You need the assets you have and cannot risk losing any principal value).  Account seeks to preserve assets and minimize risk.  Risk is low.

Income - Income producing investment vehicles (You are interested in generating income from your investments).  Account seeks dividends and interest to create income.  Risk is moderate.

Growth and Income - Allows for the flexibility of a mix of growth and income investment vehicles (Percentage of investment vehicle mix will vary depending upon your risk tolerance).  Account seeks capital appreciation, but also seeks to use dividends and interest as a source of income.  Risk is average.

Growth - Growth oriented investment vehicles.  Most often, these vehicles have a moderate to high degree of risk.  Account seeks appreciation.  Risks are generally higher.

Aggressive Growth - High growth investment vehicles.  The highest degree of risk.  Account seeks high returns through use of aggressive and risky investments.


Risk for each category varies. 

Please contact Kim Doleman, Investment Advisor Representative, for more details.

*please see below for important disclosure