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What is an investment objective?

An investment objective is a customer’s primary and secondary goal for his investments. A securities brokerage firm is required to determine what a customer’s investment objective is when the customer opens a brokerage account with the firm. Indeed, the broker is responsible for gathering the customer’s investment objective on the customer’s new account form. The main purpose of the investment objective is to ensure the customer’s goals for the account are met, to ensure the purchase or sale of securities are suitable for the customer, and to determine the proper portfolio mix for the customer.

During the life of a securities account with a brokerage firm, a customer’s investment objective often changes based upon the customer’s age or financial circumstances. It is, therefore, important for a broker to get regular updates from a customer as to the customer’s current investment objective. The investment objective is one of the key factors in evaluating whether a customer has a valid claim against a brokerage firm for a broker’s recommendation of unsuitable investments.

Please Note: McCabe Rabin, P.A. provides these FAQ’s for informational purposes only, and you should not interpret this information as legal advice. If you want advice as to how the law might apply to the specific facts and circumstances of your case, please contact one of our attorneys.

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