Knowledge Base
Prepare suitability statements for retail clients receiving investment advice
Which regulatory document requires the delivery of a suitability statement on a durable medium?
Article L.533-15 of the Code monétaire et financier (CMF) imposes this obligation to protect retail clients.
What specific elements must a justification for a recommended product include?
The justification must explain why the product meets the client's objectives (1), matches their time horizon (2), is suited to their risk tolerance (3), and remains within their loss-bearing capacity (4). ESG preferences (5) must be included where applicable.
What is the essential first step in preparing a suitability statement under MiFID II regulations?
The first step is to ensure the client questionnaire is complete and up to date. This includes verifying the client's financial knowledge, investment experience, financial situation, ability to bear losses, risk tolerance, investment objectives and sustainability preferences (Article L.533-15 of the CMF).
What elements must be included in a suitability statement to meet AMF requirements?
The statement must explain why the recommended product meets the client's objectives, matches their investment horizon, is suited to their risk tolerance, and remains within their loss-bearing capacity. It must also state its validity period and any periodic assessments where applicable (AMF SPOT reviews).
The validity period of a suitability statement must always be indicated in the document.
Yes, the document must state its validity period to inform the client of the temporal relevance of the recommendations.
Categorize items by dragging them to the appropriate zones
Items to categorize:
Financial capacity
Risk tolerance
Financial capacity includes income, liquid assets and total wealth. Risk tolerance concerns the attitude towards risk, distinct from financial capacity. Both are essential for assessing the suitability of a product.
A suitability statement may be limited to generic wording to meet regulatory requirements.
No, the content may under no circumstances be limited to generic wording. Each recommendation must be specifically justified in relation to the client's profile (AMF reviews).