Quantitative Suitability Assesses the Series of Transactions in Your Investment Account
Quantitative Suitability requires all brokers and broker-dealers to have a reasonable basis for recommending a series of transactions, even if suitable when viewed in isolation, are not excessive and unsuitable for the client when taken together in light of the client’s objectives. Thus, while a small investment in a particular product may be suitable for the investor, a large portfolio concentration in the same or similar products may be unsuitable for the same investor.
The Size of Transaction and the Pattern of Investments Made Also Determine Quantitative Suitability
In addition, the pattern and type of securities activity in the account can also be unsuitable for the investor. Factors such as turnover rate, cost-equity ratio, and use of in-and-out trading tactics indicate excessive activity that violates quantitative suitability standards.