We have compiled a glossary of common terms to help you along your financial journey.
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- 401k
- A type of retirement savings plan offered by employers. 401k plans enable employees to divert a portion of their compensation into an account owned by the employee and intended for retirement purposes.
- 401k Contribution
- The amount of money employees take from their paycheck and invest in their 401k account.
A
- Active Management
- A hand-on, strategic investment approach that seeks to outperform a benchmark. In contrast, passive management is an investment approach that intends to mirror the performance of a specific benchmark.
- Alternative Investments
- Financial assets that fall outside of conventional categories like equity (e.g., stocks), fixed income (e.g., bonds) or cash.
- Asset
- Property that has financial value now or is expected to in the future.
- Asset Allocation or Asset Mix
- The breakdown of all of the investments (such as equity, fixed income, alternative investments, and cash) in a portfolio.
B
- Bottoms-Up Research
- A research approach that focuses on the characteristics of individual investments versus high-level market trends.
C
- Corporate Retirement Plan
- A retirement plan offered by employers to their employees. There are many different types of corporate retirement plan structures, including, but not limited to, 401k, 403b, 457, SIMPLE IRA, SEP IRA, and non-qualified deferred compensation plans. Each plan has different features intended to fit employers’ unique goals, employee base, and budget.
E
- Equity
- A form of ownership in a company, including shares of stock.
- Existing Balances
- The investments held in an account or portfolio today.
F
- Fiduciary Requirements
- A fiduciary is a person or entity legally bound to act in your best interest. Certain types of corporate retirement plans require employers to undertake fiduciary duties on behalf of employees as specified by the Employee Retirement Income Security Act (ERISA). Refer to ERISA for a list of the current fiduciary requirements.
- Financial Goals
- Short-term, intermediate-term, and long-term objectives that clients would like to achieve in their financial plan.
- Financial Instruments
- Assets that can be traded.
- Financial Planning
- The process of developing strategies that bridge a person’s or family’s current financial situation and their longer term financial goals.
- Fixed Income
- A type of investment that pays fixed interest or dividend payments until the investment matures.
G
- Generational Wealth Transfer
- How families pass accumulated wealth from one generation to another.
I
- Income
- Money received, typically on a recurring basis, from work or investments.
- Income Tax Deferral
- The act of delaying payment of income taxes to a future date.
- Independent Financial Advisor
- Financial advisors that do not work for a larger financial institution such as a bank or insurance company. Consequently, they are not confined to certain financial products when proposing solutions for their clients.
- Investment
- An asset purchased with the objective of producing income or gains from that asset.
- Investment Lineup
- The list of investments offered to corporate retirement plan participants.
- Investment Management
- The act of researching, selecting, buying and selling investments on behalf of clients.
L
- Liabilities
- Money owed to someone else.
- Liquidity Needs
- How quickly a client needs or wants investments converted into cash.
M
- Market Views
- Opinions developed on current conditions and the projected trajectory of financial markets, including opportunities and risks.
- Money Managers
- A person or team that oversees investment portfolios on behalf of clients.
P
- Portfolio
- A collection of financial investments, whether owned in a single account or multiple accounts as part of a household or organization.
- Portfolio Construction or Management
- Combining different investments with different weightings to achieve a target risk and return profile.
- Portfolio Structure
- Combining different account types (e.g., retirement accounts, taxable accounts, charitable accounts) for specific purposes supporting a client’s financial plan.
- Pre-Tax Retirement Account
- A retirement account in which an employee contributes money from their paycheck before tax. Taxation occurs when the funds are withdrawn from the account.
R
- Return Objectives
- The amount of income and gains a client seeks to earn.
- Risk Tolerance
- The amount of volatility a client is able / willing to stomach.
- Roth Retirement Account
- A retirement account in which an employee contributes money from their paycheck after tax. Taxation occurs before the funds are deposited in the account, and no taxes are paid upon withdrawal.
T
- Tax Position
- A client’s current and anticipated tax burden, including, but not limited to, employment status, tax bracket, and investment gains.
- Time Horizon
- The amount of time a client plans to stay invested in an account or portfolio before needing the money for other purposes.
- Top-Down Research
- A research approach that focuses on high-level market trends versus the characteristics of individual investments.