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Series 7 Suitability Questions  - Get advice on how to answer suitability questions

Answering Series 7 Suitability Questions can be challenging for test takers.  Series 7 Suitability combines many topics into one.  In order to answer a series 7 suitability question, series 7 test takers need to know how to profile customers and make recommendations. Knowing how to profile a customer is largely about understanding how to prioritize factors in the profile.  The factors to consider are:

1. Risk tolerance
2. Time Horizon
3. Liquidity needs
4. Tax considerations
5. Financial resources
6. And the list goes on

It is difficult to know how to prioritize from reading a a textbook that may or may not be correct.  I can tell you from experience that risk tolerance is the number one consideration under most circumstances.  You should always look for a client's risk tolerance in a suitability question and go from there.  

Try these series 7 suitability questions:


Series 7 Suitability Question 1 


In order to make recommendations to clients, a registered representative is required to ask for various types of information regarding the customer’s investment profile. This information includes but is not limited to: time horizon, investment objectives, tax status, age, liquidity needs, risk tolerance, etc.  If the client does not disclose ALL of the requested information, can the registered representative still make recommendations?

A) No, financial advisors have a fiduciary obligation to collect relevant client information 

B) Yes because a financial advisor can't be held responsible for clients the requested information

C) Yes but only if the registered representative believes he or she has enough information to make an appropriate investment recommendation.

D. No, providing a recommendation without having all suitability information would violate FINRA’s suitability rules.

Answer and Explanation
This is a very tricky series 7 suitability question with what appears to have more than one correct answer.  The reality is that you can't force client to provide you with all of the information you requested.  The financial advisor has to make a judgement call as to whether he or she has enough information. 
The correct answer is C

The profiling customers part of series 7 suitability is actually easier than knowing the nuances of the products.  This means that a series 7 student needs to be familiar with the characteristics of many securities including but not limited to bonds, options, investment companies, equities, direct participation programs, variable annuities, etc.  For example, a series 7 test taker needs to know the frequency of interest payments on various debt securities.  Try the following series 7 suitability questions. If you have trouble with these questions, you should consider working with a Series 7 Tutor or acquire series 7 suitability questions

Series 7 Suitability Question 2
A customer of yours is interested in a bond that will pay interest on a regular basis.  You could recommend all of the following EXCEPT

A) A GE debenture maturing in 2037
B) A US Treasury note maturing in 2025
D) An exchange traded note
The correct answer is D.  ETNs do not pay you regular interest


Series 7 Suitability Question 3

You are meeting with a 45-year old potential customer in the 37% (high income earner)  tax bracket with a relatively long time horizon and who has a portfolio that contains the following investments and allocations:

60%... XYZ domestic large-cap common stock (A US stock acquired while working for XYZ)

30%...A diversified corporate bond mutual fund

10%... A money market mutual fund


The registered representative’s primary concern regarding a recommendation for this client should be?

A) No allocation to tax free fixed income investments.

B) No allocation to International investments

C) The concentrated position in XYZ common stock

D) There are no concerns here because the portfolio’s asset allocation is consistent with customer’s investment profile.

The above suitability question is one that a majority of people do not answer correctly most people get wrong.  There are many issues with this profile but the 60% investment in one stock is by far the most alarming among the facts.   The concentrated position results in the portfolio has far too much unsystematic risk. A financial advisor should discuss this issue with the client and develop a plan to reduce the allocation either immediately or over time, depending on situation

The correct answer is C

Series 7 Suitability Question 4

John Jay, a financial advisor with Axiom Investments, has a new client, Jane Doe.  Jane is 28 years old, has a high risk tolerance and works for computer software company.  She has not started saving for retirement but realizes that she needs to start building wealth in order to live comfortably when she is no longer employed.  Which of the following asset allocations would you recommend?


A.60% stocks and 40% bonds

B. 90% stocks and 10% Bonds

C. 50% stocks and 50% bonds

D. 20% stocks and 80% bonds

The above suitability question regarding asset asset allocation is one that should be relatively easy but sometimes it is not for test takers   Some series 7 test takers think 90% invested in stocks is too aggressive but you should not have this view for the exam.  If a customer has a high risk tolerance with a long time horizon, a recommendation should be aggressive and be geared towards stock oriented investments.
The correct answer is B.
Our related company Series 7 Exam Tutor offers series 7 suitability questions for sale.  You get 200 series 7 suitability questions plus a 41 page answer file that includes suitability content used in tutoring sessions.  To get the series 7 suitability questions, you can go to:
If you need help with answering series 7 suitability questions, you can reach out to



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