Financial firms do this theoretically to ensure that they're doing the right thing for you, but really it's CYA.
The idea is to ask you a series of questions, usually between 4 and 12 of them, in which you identify your ability to deal with various possible results. This is alternatively called a Risk Tolerance Assessment.
Example: You have $50,000 invested and the market goes down 20% this year. At the end of the year you only have $40,000. How do you feel about that? What will you do? Etcetera.
By asking the questions, a financial firm can swear to regulators that they were doing what was in your best interest.
Hopefully they really are doing that, but more than likely they're justifying why you're in their XYZ product.
Disclaimer: I'm not an attorney or a CPA, and you might need one. What I do is help people with their eventual non-working future.
Schedule a free 15-minute call here: https://bit.ly/omgcalendar. Pick the top link “FREE Discovery Call”.
Also Get Everything Ever Financial Explained For Free In The Free 5-Day EMail Course: https://bit.ly/omgstores
I specialize in financial education and collaboration and I'm a reformed broker who can help you make it happen without the high cost.
And I give customers the same professional tools that are usually limited to the yacht-owner crowd.
Happy to help more if you'd like to know more - I made my company so that everyone could have quality advice, not just those who already have a pile of money.