By understanding the various types of investment risks you will be better able to recommend securities according to a client's suitability. Remember that representatives have a fiduciary obligation to match customers with appropriate investments.
Investment RisksRisk is simply the measurable possibility of either losing value or not gaining value. In investment terms, risk is the uncertainty that an investment will deliver its expected return.
Before you can make suitable recommendations that are in line with the investment objectives of a client, you must understand the concept of risk, the types of investment risk associated with various investment vehicles and the amount of risk that a client is willing to assume. In general, your clients must first understand that no investment is without risk and that there is a trade-off between returns and the amount of risk an investor is willing to assume in order to reach his or her financial goals.
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