Determining Investor Suitability Using the Analytic Hierarchy Process

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