Financial Advice & Advisors Terms

An Accredited Financial Counselor (AFC) is a professional certified by AFCPE to help people with foundational money skills — budgeting, debt, credit, and financial behavior — rather than investment management or complex planning.

Advice-only financial planning is a model where you pay a financial planner purely for their advice — an hourly rate, a flat project fee, or a retainer — and they never manage your investments, sell financial products, or earn commissions.

Assets under management (AUM) is the total market value of investments a firm manages on behalf of clients. In financial advice, "the AUM model" refers to charging clients an annual fee calculated as a percentage of the assets the advisor manages, commonly around 1%.

A broker-dealer is a firm licensed to buy and sell securities — for customers (acting as broker) and for its own account (acting as dealer). Broker-dealers register with the SEC, join FINRA, and operate under Regulation Best Interest when recommending investments to retail customers.

BrokerCheck is FINRA's free public database at brokercheck.finra.org where anyone can look up a broker or brokerage firm — licenses, exams passed, employment history, and disclosure events like customer complaints and regulatory actions.

A Certified Divorce Financial Analyst (CDFA) is a financial professional certified by the Institute for Divorce Financial Analysts to analyze the financial side of divorce — dividing assets, valuing settlement options, and projecting each spouse's post-divorce finances.

Certified Financial Planner (CFP) is a professional certification for financial planners granted by CFP Board, requiring specific education, a comprehensive exam, years of experience, and an ethics commitment that includes acting as a fiduciary when providing financial advice.

A Certified Public Accountant (CPA) is an accounting professional licensed by a state board after meeting education and experience requirements and passing the Uniform CPA Examination. CPAs handle tax, audit, and accounting work, and hold unlimited rights to represent taxpayers before the IRS.

A Certified Student Loan Professional (CSLP) is an advisor who has completed specialized training and an exam in student loan planning — repayment plan selection, forgiveness programs, and how education debt fits into a broader financial plan.

CFP Board — Certified Financial Planner Board of Standards — is the nonprofit organization that owns the CFP® marks in the United States, sets the education, exam, experience, and ethics requirements for CFP® certification, and disciplines certificants who violate its standards.

The Chartered Financial Analyst (CFA) designation is a graduate-level investment credential awarded by CFA Institute after three sequential exams and qualifying work experience. It is the gold standard for investment analysis and portfolio management — a different specialty than personal financial planning.

A Chartered Financial Consultant (ChFC) is a financial planning designation issued by The American College of Financial Services, earned by completing a multi-course curriculum covering the full breadth of personal financial planning.

A code of ethics is a formal set of conduct rules a financial firm or professional must follow. Every SEC-registered investment adviser is legally required to adopt one, and credentialing bodies like CFP Board impose their own on the professionals they certify.

A commission is compensation paid to a financial salesperson or firm when a customer buys a product or executes a transaction — a sales load on a mutual fund, a payout on an annuity or insurance policy, a fee per trade. The advice attached to commissioned products is "free" because the product pays for it.

A comprehensive financial plan is a written analysis of your entire financial life — cash flow, taxes, insurance, investments, retirement, and estate matters — with specific, prioritized recommendations for reaching your goals.

A conflict of interest exists when a financial professional's own compensation or incentives could pull their advice away from what's best for the client — the central problem every advice model handles differently.

The custody rule is an SEC regulation (Rule 206(4)-2 under the Investment Advisers Act of 1940) that governs how registered investment advisers must safeguard client money and securities they hold or can access.

Discretionary authority is the power a client grants an investment adviser to buy and sell investments in the client's account without asking permission before each trade.

Dual registration means a financial professional (or firm) is registered both as an investment adviser and as a broker-dealer representative — so they can charge advisory fees on some business and earn commissions on other business.

An enrolled agent (EA) is a tax professional licensed directly by the U.S. Treasury with unlimited rights to represent taxpayers before the IRS. EAs earn the credential by passing a three-part IRS exam or through qualifying IRS work experience, and they specialize purely in taxation.

A family office is a private organization that manages the financial life of one wealthy family (a single-family office) or several (a multi-family office) — investments, taxes, estate planning, bill pay, philanthropy, and more, under one roof.

Fee transparency means you can see exactly what financial advice and products cost you, in dollars, before and after you pay — rather than having costs deducted invisibly, buried in fine print, or embedded in product pricing.

A fee-based advisor charges clients fees (hourly, flat, or a percentage of assets) and can also earn commissions from selling financial products, usually because the advisor or their firm is dually registered as both an investment adviser and a broker-dealer representative or insurance agent.

A fee-only financial advisor is paid exclusively by clients (hourly rates, flat fees, retainers, or a percentage of assets under management) and accepts no commissions, sales loads, referral fees, or any other payment from financial product companies.

A fiduciary is a person or firm legally obligated to act in someone else's best interest. In financial advice, fiduciary duty requires an advisor to put the client's interests ahead of their own, with legal duties of loyalty and care.

A fiduciary oath is a written pledge an advisor signs promising to act in the client's best interest at all times — a voluntary commitment clients can request on top of whatever legal duties already apply.

A financial advisor is a professional who helps people manage money — planning, investing, insurance, taxes, retirement — but the title itself is not regulated, so what an "advisor" actually does, charges, and owes you varies enormously.

A financial coach is a professional who helps clients build money skills and habits — budgeting, debt payoff, saving, and financial confidence — through education and accountability. Coaches do not manage investments or give investment advice, and coaching is not a licensed activity.

A financial planner is a professional who helps clients organize their whole financial life — cash flow, taxes, insurance, investments, retirement, and estate decisions — into a coherent plan. The title itself is not regulated, so training, legal duties, and compensation vary from planner to planner.

A financial therapist helps people work through the emotional and psychological side of money — anxiety, shame, couples' money conflict, compulsive spending — blending mental-health techniques with financial knowledge.

FINRA (the Financial Industry Regulatory Authority) is the self-regulatory organization that oversees broker-dealers and their registered representatives in the United States. It writes and enforces rules for the brokerage industry, administers licensing exams, and runs the free BrokerCheck database.

Fintech — short for financial technology — is software and app-based services that deliver banking, payments, investing, lending, and planning tools, usually faster and cheaper than traditional institutions, and sometimes with different consumer protections.

Flat-fee financial planning is a model where a planner charges a fixed dollar amount — for a project, a plan, or a year of service — stated up front, instead of commissions or a percentage of your investment accounts.

Form ADV is the registration and disclosure document every registered investment adviser files with the SEC or state regulators. Its plain-English "brochure" (Part 2) describes the firm's services, fees, conflicts of interest, and disciplinary history, free to read at adviserinfo.sec.gov.

Form CRS (client relationship summary) is a short, plain-English disclosure that SEC-registered investment advisers and broker-dealers must give retail investors. It summarizes the firm's services, fees, conflicts of interest, standard of conduct, and disciplinary history in just a few pages.

The Garrett Planning Network is a nationwide network of fee-only financial advisors, founded by Sheryl Garrett in 2000, whose members commit to making advice available on an hourly, as-needed basis with no asset minimums.

Held-away assets are accounts a financial advisor gives advice on but does not directly manage or bill against — most commonly workplace retirement plans like a 401(k), plus HSAs, 529 plans, and accounts you manage yourself.

Hourly financial planning is a fee model where you pay a financial planner a stated hourly rate for exactly the time you use — like hiring an attorney or CPA — with no products sold and no percentage taken from your accounts.

Investment Adviser Public Disclosure (IAPD) is the SEC's free public database at adviserinfo.sec.gov where anyone can look up an investment adviser firm or individual advisor — registrations, Form ADV filings, fees, conflicts, and disciplinary history.

An investment adviser representative (IAR) is an individual licensed to give investment advice on behalf of a registered investment adviser (RIA). IARs typically qualify by passing the Series 65 exam (or Series 66 plus Series 7) or by holding a credential such as the CFP that most states accept instead.

The Investment Advisers Act of 1940 is the federal law governing investment advisers — anyone in the business of advising others about securities for compensation. It requires registration, imposes the fiduciary duty advisers owe their clients, and is the reason "Registered Investment Adviser" means something.

Know Your Customer (KYC) is the set of legal and regulatory requirements that make financial firms verify who their customers are and understand their financial situation — the reason opening any account involves identity documents and questions about your income, net worth, and goals.

NAPFA — the National Association of Personal Financial Advisors — is the leading U.S. professional association for fee-only financial advisors, whose members are prohibited from earning commissions and must sign a fiduciary oath.

Private banking is a bank's premium service tier for wealthy clients — a dedicated banker plus preferential access to lending, deposit services, investment management, and trust services, usually gated by a high minimum balance.

A Registered Investment Adviser (RIA) is a firm registered with the SEC or a state securities regulator to provide investment advice for compensation. RIAs owe clients a fiduciary duty under the Investment Advisers Act of 1940.

A registered representative is an individual licensed through a FINRA member broker-dealer to sell securities and take customer orders. The registration authorizes selling and recommending securities as the firm's agent — it is a brokerage license, not an investment-adviser registration.

Regulation Best Interest is the SEC conduct rule, in force since June 30, 2020, requiring broker-dealers to act in a retail customer's best interest when recommending securities — a standard above the old suitability rule, but still short of the fiduciary duty investment advisers owe.

A retainer fee is a recurring fixed charge — usually annual, quarterly, or monthly — that a client pays a financial advisor for ongoing access to advice and services, independent of how much money the advisor manages.

A Retirement Income Certified Professional (RICP) is an advisor who has completed The American College of Financial Services' designation focused entirely on turning retirement savings into reliable lifetime income.

A robo-advisor is an online service that builds and manages a diversified investment portfolio automatically using algorithms — typically for a much lower fee than a human asset manager, and typically without personalized financial planning.

The Securities and Exchange Commission (SEC) is the federal agency that regulates the U.S. securities markets — including public companies, stock exchanges, broker-dealers, mutual funds, and registered investment advisers. Its mission is to protect investors, keep markets fair, and facilitate capital formation.

The Series 7 is the FINRA exam that licenses a person to sell most types of securities — stocks, bonds, options, mutual funds — as a registered representative of a broker-dealer. It is a sales license, not an advice license.

The Series 65 is the exam a person passes to become licensed to give investment advice for a fee. Passing it lets someone register as an investment adviser representative — the legal category for advisors who owe clients a fiduciary duty.

Soft dollars are benefits — most commonly investment research — that an investment manager receives from a brokerage firm in exchange for routing client trades there, effectively paying for the manager's tools with clients' commission money.

A stockbroker is the everyday name for a licensed securities salesperson — formally a registered representative of a broker-dealer — who buys and sells investments for customers. The classic commission-per-trade stockbroker has largely given way to app-based trading and advice-branded roles.

Subscription financial planning is a fee model where clients pay a flat monthly (or quarterly) amount for ongoing access to a financial planner — pricing advice like a membership rather than a percentage of investments.

The suitability standard was the longtime conduct rule for brokers, and it required that a recommended investment be suitable for the customer's situation, though not necessarily the best or cheapest available option. For retail customers it was largely superseded in 2020 by Regulation Best Interest.

Wealth management is a bundled service model in which one firm manages a client's investments and coordinates the planning around them — taxes, estate, insurance, sometimes banking and lending — typically for a percentage of the assets it manages, and typically for wealthier clients.

A wrap fee program bundles investment advice, trading, and account services into one all-inclusive fee — typically a percentage of the assets in the account — instead of charging separately for each trade.

XY Planning Network (XYPN) is a membership organization founded in 2014 that supports fee-only financial planners serving younger clients — typically Generation X and Y — often through monthly-subscription fees and with no asset minimums.