Compliance-led intelligence for modern wealth management.

ACATS — the Automated Customer Account Transfer Service — is the industry-standard system operated by NSCC for transferring customer accounts between brokerage firms. ...

Account opening is the workflow for establishing a new advisory account at a custodian — collecting the legally required information, executing the custodian's ...

Alpha is the portion of a portfolio's return that exceeds what would be expected given its market exposure (beta) and the risk-free rate. Alpha is the return ...

The annual compliance review is required by Rule 206(4)-7 under the Investment Advisers Act. Each SEC-registered investment adviser must review the adequacy of its ...

Asset allocation is the strategic distribution of a portfolio across asset classes — equities, fixed income, alternatives, cash, and real assets — designed to achieve ...

Beta measures a security or portfolio's sensitivity to movements in a benchmark — usually the broad equity market. A beta of 1.0 moves with the market on average; 1.5 ...

Billing reconciliation is the periodic verification that advisory fees actually charged to clients match the firm's contracted fee schedules and underlying asset values. ...

Rule 204-2 under the Investment Advisers Act of 1940 requires registered investment advisers to maintain specific books and records for prescribed retention periods, and ...

The 2024 amendments to Rule 204-2 modernized the SEC's recordkeeping framework for the electronic era. Advisers can now use electronic recordkeeping systems including ...

A buffer ETF — also called a defined-outcome ETF — uses options to provide a defined level of downside protection in exchange for a cap on upside, over a specified ...

Cash concentration is the build-up of uninvested cash in an advisory account beyond what the client's investment strategy requires. The SEC treats persistent, ...

The Chief Compliance Officer is the senior officer designated under Rule 206(4)-7 to administer an investment adviser's compliance program. Every SEC-registered ...

Client onboarding is the structured workflow that takes a prospect from signed engagement letter to a fully operational advisory account. A defensible onboarding ...

Rule 204A-1 under the Investment Advisers Act requires each SEC-registered investment adviser to adopt a written code of ethics setting standards of conduct, governing ...

A compliance calendar is the master schedule of an investment adviser's recurring regulatory obligations — Form ADV updates, annual review documentation, code-of-ethics ...

A compliance technology stack is the integrated set of tools an investment adviser uses to operate the compliance program — policy management, code-of-ethics monitoring, ...

Concentration risk is the loss potential created when a portfolio holds outsized exposure to a single security, issuer, sector, or asset class. It is one of the most ...

Correlation measures how two assets move together — ranging from −1.0 (perfectly opposite) to +1.0 (perfectly synchronized). Correlation is the foundation of ...

A custodian is the third-party financial institution — typically a bank or broker-dealer — that physically holds client securities and cash in safekeeping. Investment ...

The Custody Rule, formally Rule 206(4)-2 under the Investment Advisers Act, governs how investment advisers handle client funds and securities when they have custody. ...

A deficiency letter is the written document issued by the SEC's Division of Examinations after a regulatory exam, summarizing compliance failures identified during the ...

Drawdown is the peak-to-trough percentage decline of a portfolio, position, or strategy before a new high is reached. Drawdown is the loss number clients actually feel — ...

Factor exposure is a portfolio's sensitivity to systematic risk factors that academic research has identified as drivers of long-term returns — typically value, size, ...

Form ADV is the uniform form that investment advisers use to register with the SEC and state securities regulators and to disclose information about their business to ...

Form ADV Part 2A — commonly called "the brochure" — is the plain-English narrative document that investment advisers must deliver to current and prospective clients. It ...

Form ADV Part 2B is the brochure supplement that describes each individual investment adviser representative providing advice to a particular client. It covers the IAR's ...

Form CRS is the short relationship summary that broker-dealers and investment advisers must deliver to retail investors. It explains the firm's services, fees, ...

An interval fund is a registered closed-end fund that offers shareholders the right to redeem shares at NAV through periodic repurchase offers — typically quarterly. ...

An investment objective is the specific goal the client is investing to achieve — capital preservation, income generation, long-term growth, retirement funding, ...

An Investment Policy Statement is the written agreement between an advisor and a client that defines the client's objectives, constraints, the strategy for managing the ...

Know Your Customer is the structured collection of identity verification, financial situation, investment experience, objectives, and risk tolerance for each advisory ...

A leveraged ETF uses derivatives — typically swaps and options — to deliver a multiple (commonly 2× or 3×) of a benchmark's daily return, or the opposite for inverse ...

Liquidity risk is the danger that a position cannot be exited at fair value when the holder needs the proceeds. In retail advisory portfolios, liquidity risk has grown ...

The Marketing Rule, formally Rule 206(4)-1 under the Investment Advisers Act, governs all adviser advertisements — including testimonials, endorsements, third-party ...

Material non-public information (MNPI) is information a reasonable investor would consider important to a securities decision and that has not been disclosed publicly. ...

Performance reporting is the periodic communication of portfolio results to clients — returns, benchmark comparisons, contributions and withdrawals, and fee impact. ...

Personal trading rules under Rule 204A-1 govern how adviser staff with access to nonpublic client information may trade for their own accounts. Staff designated as ...

Portfolio drift is the gap between a portfolio's current allocations and its target policy weights, created as markets move, contributions arrive, and withdrawals occur. ...

Private credit is corporate lending originated outside the public bond market, typically by non-bank lenders such as private credit funds, business development companies ...

A client proposal is the structured document an advisor delivers to a prospect summarizing the recommended strategy, expected outcomes, fees, and supporting rationale. ...

Rebalancing is the act of restoring a portfolio to its target asset allocation after market movement, contributions, or distributions cause drift. Rebalancing is the ...

A Registered Investment Adviser is a firm or individual registered with the SEC or one or more state securities regulators to provide investment advice for compensation. ...

Regulation Best Interest is the SEC rule that requires broker-dealers and their associated persons to act in the best interest of a retail customer when making a ...

Regulation S-P is the SEC rule governing how investment advisers and broker-dealers protect client nonpublic personal information and respond to incidents. The 2024 ...

Risk capacity is the financial component of risk tolerance — how much investment loss a client can absorb without compromising their goals. It is calculable from cash ...

Risk needed is the level of return — and therefore the level of investment risk — a client must accept to meet their stated goals. It is the third dimension of risk ...

A risk profile questionnaire is the structured set of questions advisors use to capture a client's willingness and capacity to bear investment loss. The questionnaire ...

Risk tolerance is a client's combined willingness and ability to bear investment loss. The two components are distinct: willingness is psychological, capacity is ...

Risk willingness is the psychological component of risk tolerance — how much investment loss a client can emotionally bear without abandoning the strategy. It is ...

A rollover recommendation is the advisory recommendation to move retirement assets from one account type to another — most commonly from a 401(k) plan to an IRA. Under ...

The Sharpe ratio measures the return earned per unit of total risk taken — calculated as (portfolio return minus risk-free rate) divided by portfolio standard deviation. ...

A standing letter of authorization (SLOA) is a written instruction from a client allowing an investment adviser to direct money movements to specific named third parties ...

Portfolio stress testing models how a portfolio is likely to behave under extreme but plausible market scenarios — a 2008-style equity drawdown, a 1970s inflation shock, ...

The suitability standard is the FINRA rule requiring a broker-dealer or associated person to have a reasonable basis to believe that a recommended securities transaction ...

Time horizon is the length of time over which a client expects to keep the portfolio invested before needing the proceeds. Time horizon is a primary driver of risk ...

Tracking error is the standard deviation of a portfolio's return differences from its benchmark — a measure of how closely the portfolio follows the benchmark. Low ...

Trade settlement is the actual exchange of securities and cash following a trade. The U.S. equity and corporate bond market moved to a T+1 settlement cycle in May 2024 — ...

The wash sale rule under Internal Revenue Code Section 1091 disallows a tax loss when the same or substantially identical security is purchased within 30 days before or ...