Glossary of terms used in wealth management, portfolio, financial planning and advisor software.
Account aggregation is the automatic gathering of a client's balances and holdings from many institutions into one consolidated view for the advisor.
Assets under management (AUM) is the total market value of the investments a firm or advisor manages on behalf of clients.
AUM fee billing is the process of calculating and collecting advisory fees based on a percentage of the client assets a firm manages.
Cash-flow planning is a financial-planning method that projects every inflow and outflow year by year to test whether a client's plan stays solvent over time.
A client portal is a secure online space where advisory clients view accounts, reports, and documents and exchange files with their advisor.
A custodian is a regulated financial firm that safeguards client assets, settles trades, and reports holdings for an advisor's clients.
Direct indexing is owning the individual securities of an index directly, rather than through a fund or ETF.
A fee-only advisor is a financial advisor paid solely by client fees and who accepts no commissions or third-party compensation for products sold.
Goals-based planning is a financial-planning method that organizes a client's savings and investments around specific life goals rather than a single return target.
A household groups a client's related accounts and family members so advisors can view, bill, and report on total relationship wealth.
A model portfolio is a predefined target allocation of assets that an advisor applies across many client accounts.
Monte Carlo simulation is a technique that runs a financial plan through hundreds or thousands of random market scenarios to estimate its probability of success.
Performance attribution is the analysis that explains why a portfolio's return differs from its benchmark.
Portfolio rebalancing is the process of buying and selling assets to return a portfolio to its target allocation.
Reconciliation is the daily process of matching a firm's records of holdings and transactions against the custodian's records.
An RIA is a firm or person registered with the SEC or a state that gives investment advice under a fiduciary duty to clients.
A required minimum distribution (RMD) is the minimum amount the IRS requires an account holder to withdraw each year from certain tax-deferred retirement accounts.
Risk tolerance is the degree of investment loss and volatility a client is willing and able to accept in pursuit of higher expected returns.
A Roth conversion is the transfer of money from a pre-tax retirement account into a Roth account, paying income tax now in exchange for tax-free growth later.
SOC 2 is an AICPA audit report attesting that a software vendor's controls protect customer data across security and related criteria.
Tax-loss harvesting is selling investments at a loss to offset capital gains and reduce a client's tax bill.
Time-weighted return (TWR) measures investment performance while removing the effect of client deposits and withdrawals.
A TAMP is an outsourced platform that handles investment research, model portfolios, trading, and back-office admin for advisors.
A UMA is a single account that holds multiple investment strategies — models, SMAs, ETFs, and funds — under one coordinated structure.