How often should client information and suitability statements be updated?

The frequency of updating client information and suitability statements is crucial for maintaining appropriate and compliant investment advisory practices. The correct approach is to do so every three years.

Updating client information every three years ensures that investment advisors stay informed about any significant changes in the client’s financial situation, investment objectives, or risk tolerance. Markets and personal circumstances can shift, leading to potentially outdated strategies that no longer align with a client’s current needs. By reviewing and updating information at this regular interval, advisors can continue to provide appropriate recommendations and maintain a good fiduciary standard.

While annual updates may seem reasonable for some firms, they are not always necessary for every client, especially in stable financial situations. Updating client information every six months could be overly burdensome for both the advisor and the client, and may not significantly enhance the service provided. Updates only at the client’s request lack a proactive approach, which can leave gaps in understanding the client's current context affecting investment decisions.