Series 6 Exam Review – Suitability Cases

📊 Series 6 Exam Review – Suitability Cases You Must Know

One of the most tested areas on the Series 6 Exam is suitability—the ability to recommend the right product based on a client’s financial profile, goals, and risk tolerance. FINRA expects registered representatives to understand not only the features of investment products but also when those products are appropriate.

This review focuses on realistic suitability case types you’ll likely see on the exam, so you can recognize red flags, match client needs, and avoid compliance violations.

🧠 What Is Suitability?

Suitability is the legal and ethical obligation to ensure that investment recommendations align with a client’s:

• 🎯 Investment objectives
• 💵 Financial situation and income
• 📈 Risk tolerance
• 📅 Time horizon
• 💼 Tax status and liquidity needs

On the Series 6 exam, you’ll be tested not just on definitions, but on how to apply suitability standards in real-world cases.

🔍 Suitability Case Types to Master

✅ Case 1: Conservative Retiree with Limited Income

Client Profile:

• Age 68
• Retired
• Fixed income from Social Security and pension
• Seeks capital preservation

Appropriate Products:

• Investment-grade bond funds
• Government securities (e.g., Treasury funds)
• Money market mutual funds

Inappropriate:

• Growth funds
• Variable annuities
• Sector-specific or high-yield funds

💡 Why? The client’s objective is stability, not growth or risk exposure.

✅ Case 2: Young Professional Seeking Long-Term Growth

Client Profile:

• Age 30
• Stable job, no dependents
• High risk tolerance
• Retirement goal in 35 years

Appropriate Products:

• Growth mutual funds
• Equity-focused funds
• Variable annuities with equity subaccounts

Inappropriate:

• Income-focused funds
• Short-term fixed-income products

💡 Why? Long time horizon + high risk tolerance = aggressive growth strategies.

✅ Case 3: Parent Saving for College in 7 Years

Client Profile:

• Age 40
• Moderate income
• Saving for child’s education
• Wants moderate growth with reduced risk

Appropriate Products:

• Balanced funds
• Target-date education funds
• Short- to mid-term bond funds

Inappropriate:

• High-risk sector funds
• Long-term annuities

💡 Why? The need for funds in 7 years requires less volatility.

✅ Case 4: High-Income Client Seeking Tax Efficiency

Client Profile:

• Age 50
• High-income tax bracket
• Already maxed out retirement accounts
• Seeks income and tax advantages

Appropriate Products:

• Municipal bond funds (for tax-free income)
• Tax-managed mutual funds

Inappropriate:

• Corporate bond funds (fully taxable)
• Funds with high turnover (leading to capital gains)

💡 Why? Tax efficiency is critical in high brackets.

⚠️ Red Flags on the Exam

• Recommending growth funds to a low-risk client
• Selling variable annuities to clients needing immediate liquidity
• Ignoring time horizon in selecting mutual funds
• Failing to disclose fees or surrender charges
• Offering income products to clients with no need for cash flow

📝 Sample Question

A 66-year-old retiree living on a fixed income asks for a safe place to invest $50,000 for principal protection and emergency access. Which is most suitable?

A. Variable annuity
B. Growth mutual fund
C. Money market mutual fund
D. High-yield bond fund

Correct Answer: C. Money market mutual fund
Explanation: The client’s need for capital preservation and liquidity makes a money market fund the most appropriate. Other options involve excessive risk or long holding periods.

🚀 Master Suitability, Pass the Exam

The key to passing the Series 6 is understanding why a product fits a specific client profile. Learn to apply suitability logic across diverse scenarios, and you’ll be ready for whatever the exam throws at you.

👉 Access Full Series 6 Suitability Practice Sets

Know your clients. Choose the right products. Pass with confidence.