Determining Investor Suitability Using the Analytic Hierarchy Process

Posted: 12 May 2000

See all articles by Paul J. Bolster

Paul J. Bolster

Northeastern University - Finance and Insurance Area

Vahan Janjigian

Northeastern University

Emery A. Trahan

Northeastern University, Finance Group

Abstract

The object of this research is to develop a theoretically sound and workable model for determining investments that are suitable for particular individual investors. The Analytic Hierarchy Process (AHP), developed by Saaty (1980), is employed as a useful model for characterizing investors in terms of suitability. The model developed here makes the process of choosing securities less subjective without forfeiting the broker's ability to tailor portfolios to the needs of clients. The use of a formal model for security selection produces more consistent results and should provide some degree of protection against unsuitability lawsuits against brokers and brokerage firms.

JEL Classification: G12

Suggested Citation

Bolster, Paul J. and Janjigian, Vahan and Trahan, Emery A., Determining Investor Suitability Using the Analytic Hierarchy Process. Available at SSRN: https://ssrn.com/abstract=5946

Paul J. Bolster (Contact Author)

Northeastern University - Finance and Insurance Area ( email )

Boston, MA 02115
United States
617-373-5051 (Phone)
617-373-8798 (Fax)

Vahan Janjigian

Northeastern University

Boston, MA 02115
United States

Emery A. Trahan

Northeastern University, Finance Group ( email )

Boston, MA 02115
United States

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