TAKING THE SIE EXAM? AN IMPORTANT SIE EXAM TOPIC TO STUDY IS SUITABILITY OF RECOMMENDATIONS
One of the most important qualities of a registered securities representative is never to recommend that a customer or client purchase or sell any security unless the recommendation is suitable for the client. Specifically, FINRA has established a three-fold prong for observing the Suitability rule. There are three questions that a SIE candidate must ask himself/herself in determining Suitability: 1. Is the security suitable in itself? In other words, would a reasonable person determine that the security incorporates real and reasonable value? 2. Is the security recommendation suitable for this particular customer? A security recommendation may be highly reasonable for 90 percent of a rep's customers, but highly unreasonable for the remaining 10 percent. 3. Finally is the recommendation suitable in terms of quantity? This quantitative evaluation means that a 100 shares may be suitable for this customer Mr. Jones or Ms. Smith...