SIE practice questionmediumBest Interest and Suitability
A registered representative recommends a high-risk leveraged ETF to a retired client with low risk tolerance. This recommendation is most likely:
- ARequired for portfolio diversification
- BAppropriate due to potential returns
- CUnsuitable and not in the client’s best interest✓ Correct answer
- DAcceptable if the client agrees
Explanation
Why C — Unsuitable and not in the client’s best interest
Recommendations must match client risk profiles. Suggesting a high-risk product to a risk-averse retiree violates suitability and best interest obligations, regardless of client agreement or diversification claims.
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