Investment professionals have a legal obligation to recommend suitable investments to their customers. That is, investment advice must be consistent with an investor’s objectives and tolerance for risk. An investment suitable for one person is thus not always suitable for another. Investment professionals must further comply with FINRA’s “know your customer” rule, which requires brokers and financial advisors to consider a host of essential facts about each individual customer before making investment recommendations. This gathering of facts starts at the opening of the customer’s account, and requires the investment professional to obtain through “reasonable diligence” the customer’s investment profile as a way of formulating a reasonable basis for the suitability of the investment advice. A customer’s investment profile includes, but is not limited to:

Thus, before making any recommendation, a financial professional must have a solid understanding of both the investment and the individual needs of each customer.