| Fee-Only Advisor |
Fee-Only financial advisors are compensated solely by the client,
typically achieved through an asset management fee. Neither advisors nor affiliates may receive
commissions, rebates, awards, finder's fees, bonuses or other forms of compensation. The fee-only
model of compensation reduces the potential for conflicts of interest between the advisor
and the client in that the advisor is not beholden to insurance companies, particular investments,
and other financial companies. |
| Diversification |
Diversification is a risk management technique that mixes
a wide variety of investments within a portfolio. It is the spreading out of investments to reduce risks.
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| Asset Allocation |
Asset allocation refers to how an investor distributes his or her
investments among various classes of investment vehicles such as stocks, bonds, and cash. |
Exchange-Traded Fund
("ETF") |
An ETF is an
investment vehicle traded on
stock exchanges,
much like
stocks.
An ETF holds assets such as stocks or bonds and trades
at approximately the same price as the
net asset value
of its underlying assets over the course of the trading day. |
| 12b-1 Fee |
An annual marketing or distribution fee on a mutual fund.
The 12b-1 fee is considered an operational expense and, as such,
is included in a fund's expense ratio.
It is generally between 0.25-1%
(the maximum allowed) of a fund's net assets. |
| Annuity |
A financial product sold by financial institutions that
is designed to accept and grow funds from an individual and then, upon annuitization,
pay out a stream of payments to the individual at a later point in time. |
Contingent Deferred Sales Charge
("CDSC") |
A fee (sales charge or load) that mutual fund investors pay
when selling Class-B fund shares within a specified number of years of the
date on which they were originally purchased.
Also known as a "back-end load" or "sales charge". |
| Exit Fee |
A fee or charge assessed to an investor for withdrawing
money prior to a previously stipulated date. This is almost always expressed
and charged as a percentage of assets rather than a flat fee.
May also be known as a "redemption fee", "back-end load", or
"contingent deferred sales charge". |
| Expense Ratio |
A measure of what it costs an investment company to operate
a mutual fund. An expense ratio is determined through an annual calculation,
where a fund's operating expenses are divided by the average dollar value of
its assets under management. Operating expenses are taken out of a fund's
assets and lower the return to a fund's investors. |
| Insurance product |
A policy, annuity, or certificate of insurance issued by
an insurer or evidence of insurance coverage issued by a self-insured
association, including those with savings and investment features. |
| Surrender Charge |
A fee levied on a life insurance policyholder upon
cancellation of his or her life insurance policy.
The fee is used to cover the costs of keeping the insurance policy
on the insurance provider's books.
Also known as a "surrender fee". |
| Mutual Fund |
A mutual fund is a managed type of collective investment scheme that pools
money from many investors and invests it in stocks, bonds, short-term money market
instruments, and/or other securities. |
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