|Has the objective of performing better than the returns of a given investment market.
|Adviser service fee
|A fee paid to an adviser for ongoing service and advice.
|An investment strategy that attempts to balance risk versus reward by adjusting the percentage of each asset in an investment portfolio according to the your risk tolerance, goals and investment time frame.
|ATP (Authority to Proceed)
|A formal confirmation that you understand and accept the recommendation(s).
|A set of conditions against which a product or business is measured.
|Person or entity entitled to benefits such as life insurance proceeds, superannuation.
|When you die your super fund trustee must pay out your super according to your instructions.
|The difference in buy and sell prices (which is the aggregate of any buy cost and sell cost) is the buy/sell spread.
|An increase in the value of an asset, also called capital appreciation.
|The measure of actual cash flowing in and out.
|CCQ (Confidential Client Questionnaire)
|A fact finding document containing client financial and personal information and consents.
|Super contributions that receive favourable tax treatment. They are before-tax contributions that can include employer contributions, contributions made under a salary sacrifice arrangement and tax-deductible contributions by an individual.
|Cooling off period
|This is a period in which you are able to cancel your insurance policy without penalty.
|Dependant (SIS )
|SIS: Dependant’, in relation to a person, includes the spouse of the person, any child of the person and any person with whom the person has an interdependency relationship. Note that the use of the word ‘includes’ in the SIS definition has allowed the courts to extend ‘dependency’ to those who were financially dependent on the member.
|A security whose price is dependent upon or derived from one or more underlying assets. The derivative itself is merely a contract between two or more parties. Its value is determined by fluctuations in the underlying asset.
|Spreading your capital across different investments to reduce your overall investment risk.
|The distribution of a company’s earnings.
|Dollar Cost Averaging
|Dollar cost averaging takes some of the risk out of investing in fluctuating markets because it removes the factor of deciding ‘when’ to invest. The basis of dollar cost averaging is that you invest a set amount on a regular basis, no matter whether the market is up or down.
|Enduring Power of Attorney
|A safeguard against the possibility of not having anyone with authority to manage your property and finances if you suffer loss of mental capacity.
|Value of shares owned.
|FSG (Financial Services Guide)
|A legally required document which outlines services offered, licensing provisions and complaints procedures. It should assist you in deciding whether to accept the services of a financial adviser.
|Gearing is using borrowed money to invest in income producing assets. The purchase of growth assets financed with borrowed funds remains one of the most effective ways to accumulate wealth. Interest and associated costs may be tax deductible. There are generally three different levels of gearing: 1) Positive gearing occurs when the costs of the loan used to finance the investment (ie interest) are less than the income generated (ie dividends, rent, etc); 2)Neutral gearing occurs when the costs of the loan used to finance the investment (ie interest) are approximately the same as the income generated (ie dividends, rent, etc). 3) Negative gearing occurs when the costs of the loan used to finance the investment (ie interest) are greater than the income generated (ie dividends, rent, etc).
|Provides the authority to make lifestyle or personal decisions for someone who is incapable of making these decisions for themselves. Such as children, disabled/vulnerable.
|Hybrid securities are a broad group of securities that combine the elements of two broader groups of securities, debt and equity. Hybrid securities pay a predictable (fixed or floating) rate of return or dividend until a certain date, at which point the holder has a number of options including converting the securities into the underlying share.
|Aims to match the returns of a specific market as measured by a particular index like, say, the S&P/ASX 200.
|Individual Managed Account (IMA)
|A Managed Account where the fund manager’s investment decisions are made in conjunction with your specific needs and requirements. You have direct ownership over the underlying investments.
|The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.
|Insurance policy exclusion
|Exclusions mean that a claim cannot be made as a result of an excluded pre-existing medical condition or from participating in an excluded activity.
|Insurance policy loading
|A loading is a percentage increase on the standard premium, usually due to a pre-existing medical condition.
|The guiding principle that you as an investor use to decide where to invest his or her money – might be capital growth or income.
|A financial obligation or amount owed.
|How quickly assets can be converted into cash.
|Remuneration paid to an investment manager. Is usually a percentage of assets.
|Because the lender will not lend the total amount needed to purchase the investments, borrowers are required to keep a certain level of equity in the loan. This is referred to as the Loan to Valuation Ratio (LVR). As investment markets fall, this ratio may move outside the allowable limits so that the borrower has insufficient security. To this end, the lender has the right to ask for the LVR to be restored by: 1) Asking for additional monies; 2) Requiring additional security 3) Having the underlying investments sold.
|A margin lending facility is a gearing method used when investors wish to use a combination of their own funds and borrowed funds to commence an investment portfolio. The lender then holds these investments as security for the loan. You must meet the agreed loan repayments and keep the loan within the agreed lending margin. The lending margin is the proportion of borrowed funds used to purchase the underlying security. Depending on the type of investments chosen, lending margins can range from 40% to 70% (that is the amount of the loan compared to the total value of the security assets).
|The strategy of making buy or sell decisions of financial assets (often stocks) by attempting to predict future market price movements.
|The super fund trustee may use its discretion to review other claims against your benefit.
|These are also known as “after-tax” or “undeducted” contributions.
|PDS (Product Disclosure Statement)
|A disclosure document issued by financial product providers for use in offers of financial products to retail investors (other than offers of shares, debentures or certain Government debt instruments).
|Regular payments made from personal pension accounts, government or previous employers.
|Power of Attorney
|A legal document that appoints and authorises someone to act on your behalf in the areas of property and financial management.
|The potential of losing something of value.
|The amount of risk that you are prepared to take
|RoA (Record of Advice)
|It is a simple advice document that may be provided at some stage following a Statement of Advice.
|SoA (Statement of Advice)
|Is a legally required document which forms a written explanation of the adviser’s advice to a client. It must include the basis on which the advice is given, details of the providing entity, and information on any payments or benefits the adviser or licensee will receive.
|Stepped/level insurance premiums
|The stepped premium increases with your age; The level premium is higher than the stepped premium, however as you age, it only increases by indexation.
|The relative rate at which the price of a security moves up and down.
|A legally enforceable declaration of how a person wishes his or her property to be distributed after death.