It is the responsibility of the stock tips firm to ensure the following: Investment advice and related investments are appropriate to the client’s risk profile. The adviser has a documented process for selecting investments based on the client’s investment objectives and financial situation. The adviser must understand the nature and risks of products or assets selected for clients.
The adviser must have a reasonable basis for believing that a recommendation or transaction entered into:
- Meets the client’s investment objectives.
- Is make sure that a trader is fit to bear the losses and consistent with its investment objectives and risk tolerance.
When an advice or recommendation is given to a client to purchase a complex financial product, such a recommendation or advice must be based upon a reasonable assessment that the structure and risk-reward profile of the financial product are consistent with clients experience, knowledge, investment objectives, risk appetite and capacity for absorbing the loss.
It is important for an advisory to check the suitability of the services with respect to the client’s portfolio and risk taking capacity. The advisory has to wisely decide whether free commodity tips are suitable for the client or not.