Just call us Bond. Amortized bond.
Over 700 finance terms, Shmooped to perfection.
The law is pretty clear on this: If you're a broker or adviser, you have do what's best for your client...not what's best for you, your commission structure, or the Hawaii trip you win at the end of the year for whoever shafted the dumbest client.
You work for the client, not against them. Even if the client has halitosis and is a close talker, you don't give them lousy recommendations. And if you do, the law will come down on you hard.
An unscrupulous investment adviser recommends 90 year-old Grandma Madge sink her life savings into a 30-year long bond. Unsuitable? You bet. Like is she really gonna live 90 more years? Would you put her into venture capital? Uh... no.
A fund typically lasts a decade, so that won't work either. Equities? Eh. Maybe very small, if it pays a fat dividend. So what is suitable for a 90-year-old grandma? Well, cash looks pretty good.
You don't get big commissions selling people cash, but it's the suitable thing to do. Short term paper, low yields, low risk.