Sales suitability
Sales suitability means selling and providing suitable products or services to suitable investors [China Business Law Journal].
Suitability refers to an ethical, enforceable standard regarding investments that financial professionals are held to when dealing with clients. Before making a recommendation, brokers, money managers, and other financial advisors must take steps that ensure the asset or product is suitable—that is, appropriate for—that investor's goals, needs, and risk tolerance.
Any financial firm or individual dealing with an investor must answer the question, "Is this investment appropriate for my client?" The firm, or associated person, must have a legally reasonable basis, or high degree of confidence, that the security they are offering to the investor is in line with that investor's objectives (such as risk tolerance) as stated in their investment profile. Both financial advisors and broker-dealers must fulfill a suitability obligation, which means making recommendations that are consistent with the best interests of the underlying customer. The Financial Industry Regulatory Authority (FINRA) regulates both types of financial entities under standards that require them to make appropriate recommendations to their clients. However, a broker, or broker-dealer, also works on behalf of the broker-dealer firm, which is why the concept of suitability needs to be defined to safeguard investors from predatory practices [Investopedia].
Sales suitability. China Business Law Journal. Retrieved from: https://law.asia/sales-obligation-financial-products/
Sales suitability. Investopedia. Retrieved from: https://www.investopedia.com/terms/s/suitable.asp