APPENDIX
Suitability Summary
Suitability by Type of Investor |
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If the investor is… |
…these may be suitable |
…these may be less suitable |
…and these may be unsuitable |
Elderly at the time of making the investment |
• U.S. Treasuries • Treasury bond funds and ETFs • Highly rated corporate bond funds and ETFs • High-paying dividend stocks • Dividend funds and ETFs • Bank CDs • Immediate annuities |
• Growth stocks |
• Deferred annuities • Equity index annuities • Switching annuities that result in surrender and other fees • Mutual fund B shares • Exchanging an annuity or variable life insurance policy for another (Section 1035 exchanges) • Complex products, such as principal protected notes (PPNs) and other structured notes • High yield bonds • Speculative options • Penny stocks (microcap stocks) • Illiquid investments, such as private placements and DPPs • Non-traded REITs • Liquidating retirement savings or using home equity to invest in securities • Products with long holding periods • Products with high withdrawal fees |
In a high income tax bracket |
• Municipal securities • U.S. Treasury securities in states with high income tax • Growth stocks • Investments where income is deferred, such as private placements, limited partner ships and DPPs • Tax-advantaged accounts, as appropriate: • IRAs • 401(k)s • 529 accounts • ABLE accounts |