What Does that Mean to Me and My Financial Future?
- 401(k) Advisory Services: Services provided by the Registered Investment Advisor (RIA) for a qualified profit-sharing plan (Plan) that allows employees to contribute a portion of their wages to an individual account. The RIA services include: development of investment criteria for the Plan’s assets, selection of initial investment funds, adoption of rules for reviewing ongoing performance of such funds and the education of Plan participants.
- Aggressive Portfolio Strategy: An investment strategy that attempts to achieve maximum financial returns usually assuming greater financial risk. For example, such a portfolio may have 50-100% invested in stocks. The investor’s risk tolerance is generally higher and time horizon longer.
- Asset Allocation: The process of choosing among possible asset classes (cash, bonds, stock, precious metals, commodities, real estate, etc). Different asset classes offer returns that are not perfectly correlated; hence, diversification of assets reduces the overall risk in terms of the variability of returns.
- Bonds: Certificates of debt issued by the government or a corporation offering repayment of the original investment plus interest by a specified future date.
- Conservative Portfolio Strategy: An investment strategy of capital preservation and / or current income that seeks to preserve portfolio value by investing in lower risk securities such as fixed income and money market. The investor’s risk tolerance is generally low to moderate.
- Discretionary Private Investment Management: Having discussed and agreed upon your investment strategy, you delegate the day-to-day decisions regarding your portfolio to us. Such decisions are made within the constraints of authority set forth in the Investment Policy Statement. When managing a portfolio on a discretionary basis, we are acting in a fiduciary capacity, meaning we are acknowledging in writing that all such decisions must be in the client’s best interest.
- Exchange-Traded Funds (EFT): Securities that track an index, a commodity or a basket of assets like an index fund but trades like a stock on an exchange. ETFs have price changes throughout the day as they are bought and sold.
- Equities: Shorthand for stock market investments; if you have stocks then you have equity in, or own a portion of the company. Equities are one of the principal asset classes, the others being fixed income (bonds) and cash / cash equivalents.
- Employee Retirement Income Security Act (ERISA): A 1974 law that regulates the operation of private pensions and benefit plans to ensure that employers and other involved parties do not misuse the funds entrusted to them in retirement accounts.
- Fee Based: A fund or portfolio where the money manager is paid a percentage of the fund or portfolio’s market value rather than commissions based on the number of transactions. Fee-based investment is better thought to align the incentives of investors and money managers and reduces the temptation to over-trade.
- Fiduciary: An individual or an institution bound to act for the benefit of another.
- Investment Strategies: Basic standards and beliefs that direct investment decisions based on individual goals, risk tolerance, future needs for capital and personal beliefs about what guides markets. Most investment strategies will include asset allocation, risk guidelines as well as buy and sell guidelines.
- Investment Policy Statement: A document developed between the client and the portfolio manager that identifies the client’s general investment goals and objectives and the strategies to meet those objectives, including asset allocation, risk tolerance and liquidity.
- Institutional Mutual Funds: Pools of money that are managed by an investment company, offering investors a wide variety of goals that vary depending on the fund and its investment charter.
- Registered Investment Advisor (RIA): A person or business providing investment advice and is registered with, and therefore regulated by, the SEC. or the appropriate State(s).
- Securities and Exchange Commission (SEC): US Government agency having primary responsibility for enforcing the federal securities laws and regulating the securities industry / stock market.