HELPFUL TERMS

Accredited Wealth Management Advisor (AWMA)
A designation for an investment professional listed on the College’s Designation Resource website (www.cffpdesignations.com) signifying to the public and financial services regulators their compliance with continuing education requirements and adherence to rigorous ethical standards.

Asset Allocation
An investment strategy that diversifies a portfolio with different types of investments, typically a mix of stocks, bonds and cash equivalents, in order to achieve a balance of risk and return.

Certified Financial Planner (CFP)
A professional planner who has met certain requirements of education, experience and ethical conduct, and passed examinations in investment, tax, estate, retirement and insurance planning. To keep their certification, CFPs are obligated to take continuing education classes.

Certified Public Accountant (CPA)
A licensed tax and accounting specialist. CPAs are required to pass a rigorous exam and must take continuing education classes to keep current with changing tax laws.

Chartered Financial Analyst (CFA)
An advisor who usually specializes in investment analysis and selection. To earn the CFA designation, investment professionals must complete a three-year program and pass rigorous exams on investment analysis, asset valuation and portfolio management. They also must adhere to stringent professional and ethical standards.

Chartered Financial Consultant (ChFC)
A ChFC must pass a comprehensive curriculum of ten courses in financial services, with an emphasis on insurance. In addition, ChFCs must also have a minimum of three years of qualifying experience and abide by strict ethical standards.

Chartered Investment Counselor (CIC)
To become a CIC, an investment manager must, among other things, have completed all the requirements specified for a CFA designation, meet rigorous ethical and professional standards, and have completed five years in a position actively managing client portfolios.

Discretionary Account
An account in which the investor permits a third party to act on the investor’s behalf in buying and selling securities without first consulting with the investor. The third party has discretion as to the choice of securities, prices and timing, subject to limitations specified in the agreement.

Fee-based
A type of compensation that is generally derived from client fees. Fee-based managers may also receive commissions for recommending products such as insurance policies or annuities. Fee-only managers are compensated solely by fees paid by their clients, and receive no commissions from any other source.

Financial Planner
A professional specializing in the development of a comprehensive financial plan to meet an investor’s tax planning, estate planning and insurance needs. Some financial planners can also offer investment management services to support the investor’s overall plan objectives.

Form ADV
The uniform form used by investment advisors to register and update registrations with the Securities & Exchange Commission (SEC) and, in most states, with the applicable state regulator. The form is also used to comply with SEC Rule 206(4)-4, which obligates investment advisors to disclose significant financial and disciplinary information to clients.

Independent Investment Manager
A professional who offers advice on the development and management of an investment plan, and regularly reviews the client’s portfolio to ensure his or her investment objectives are met. Independent managers are not employees of brokerage firms, banks, mutual fund or insurance companies.

Investable Assets
Items of value owned by an investor that can be moved readily to an account for investment in stocks, bonds, mutual funds and other financial instruments.

Limited Power of Attorney
A legal document in which an investor gives a third party, usually an investment manager or financial institution, the authority to trade on his or her behalf.

National Association of Securities Dealers (NASD)
An association of over-the-counter (OTC) brokers and dealers that establishes legal and ethical standards of conduct for its members. NASD was established in 1939 to regulate the OTC (now NASDAQ) market.

Portfolio
Combined holdings of more than one stock, bond, commodity, real estate investment, cash equivalent or other assets by an individual or institutional investor.

Registered Representative
An employee or partner in a brokerage firm who is registered to handle client accounts. A registered representative must pass an examination administered by the National Association of Securities Dealers.

Securities and Exchange Commission (SEC)
The SEC is an independent, nonpartisan, quasi-judicial regulatory agency with responsibility for administering the federal securities laws. The SEC also regulates firms engaged in the purchase or sale of securities, people who provide investment advice and investment companies.