How finance folk use it
Before you can invest in something like a bond or a unit investment trust fund (UITF), you must take a suitability assessment. This is like having a fitness test so your coach can design a program for you.
Instead of checking your physical fitness, however, it checks your financial fitness. In general, it covers things like your level of experience in investing, how often you might need to withdraw, how much risk you’re willing to take, among others.
Is it good or bad?
Good. Suitability assessments are meant to help people gauge themselves so they can know what investments match both their goals and lifestyle. At the same time, they discourage people from investing in things they can’t commit to or might be too risky. Therefore, while the paperwork involved might be a bit of a hassle, they do good by providing guidance and protection for people.
What it means for you
The suitability assessment is a great way to understand what kind of investments suit you. They can even help people who don’t know about investing but want to. An aspiring investor could take the assessment then research more about what’s been recommended for them.
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