A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Asset Allocation

The overall mix of asset types (stocks, bonds and cash equivalents) needed to achieve an individual’s goals given the client’s risk tolerances and investment horizon. The asset allocation is usually an integral part of an investor’s written investment objective.

top


Assests under Management (AUM)

The total dollars under direct investment management by an investment broker or RIA firm.

 top


Benchmark

A benchmark is a standard against which the performance of a security, mutual fund, or investment manager can be measured. Generally broad market or market-segment stock or bond indexes are used for this purpose. Benchmarks are used to compare an investment or investment portfolio to an index with no real-world costs such as manager fees of transaction costs. 

top


Broker

An individual or a firm that normally charges a fee or commission for executing buy and sell orders of a security submitted on behalf of another individual.  Brokers are fee and commission based providers of financial products while Registered Investment Advisors (RIA) charge a stated percent of assets under management for investment services.

top


 Certified Financial Planner (CFP)

A certification awarded by the Certified Financial Planner Board of Standards, Inc. to individuals who complete the CFP Board’s certification requirements. Candidates are required to pass the CFP exam focusing on the following areas: financial planning, taxes, insurance, estate planning and retirement. Once past the exam, the candidate must conform to the CFP code of ethics as well as complete annual continuing education requirements to maintain their CFP designation.

top


 Certified Trust & Financial Advisor (CTFA)

A professional designation given by the American Banker’s Association for financial professionals, focusing on bankers, financial planners, tax professionals and trust officers.  To achieve the designation, the candidate must complete the ICB trust training program which includes the CTFA exam focusing on the following areas:  taxes, investments, financial planning, trusts and estates.  Once certified, the candidate must conform to the professional code of ethics and complete annual continuing education requirements.

top


 Chartered Financial Analyst (CFA)

A professional designation given by the CFA Institute (formerly AIMR), that measures the competence and integrity of financial analysts.  Candidates are required to pass three levels of exams that include the following areas of study: accounting, economics, ethics, money management and security analytics.  The CFA designation is one of the most difficult and respected accreditations in the financial industry.

top


 Custodian

A financial institution that holds customers’ securities for safekeeping to minimize the risk of their theft or loss. These “holders of the assets” usually provide services including asset valuation, collecting interest and dividends, producing accounting statements and providing annual income tax information.

top


 Exchange Traded Fund (“ETF”)

An investment that looks like a mutual fund (basket of similar investments collectively purchased by a number of investors) but is traded like a stock on a stock exchange.  ETFs are designed to track a specific investment index, so are passively managed.  The benefit to ETFs are normally their low cost structure and the ability to sell at any time during the day- no need to wait for the fund to be priced at market close to fix the day’s sell price.  A disadvantage of ETFs is that they are not as liquid as mutual funds.  A mutual fund will settle next trading day but ETFs have a three trading day settlement structure. Thus ETF investors have a longer wait to have cash available.

top


 Federal Open Market Committee (FOMC)

The policy making branch of the Federal Reserve that makes the important decisions on interest rates and other monetary policy issues.

top


 Federal Reserve

Created in 1913 by Congress as an independent entity to implement monetary policy, the “Fed” is headed by the seven-member Board of Governors and supervises 12 regional Federal Reserve Banks located in major cities around the U.S.  The Federal Reserve’s two primary mandates are to control inflation and help grow the economy.

top


 Financial Industry Regulatory Authority (FINRA)

Organized in July, 2007 by the National Association of Securities Dealers (NASD) and the New York Stock Exchange (NYSE) to regulate the securities industry.  A self-regulatory agency that reviews investment practices and enforces compliance.

top


 Fiduciary

A legal duty of one party to another, a Fiduciary is a person or organization that owes to another the requirement to act in good faith and trust and who is bound to ethically act in the other’s best interests. Registered Investment Advisors (RIAs) are bound to a fiduciary standard as part of the Investment Advisors Act of 1940, and are regulated either by the SEC or state securities regulators based upon the total amount of assets managed by the RIA.  Copper Harbor Investment Advisors is a Registered Investment Advisor and held to fiduciary standards.

top


 Gross Domestic Project (GDP)

The market value of all final goods and services produced within a country in a given period of time. 

top


 Index Fund

A type of mutual fund whose portfolio is made to match or track the components of a market index, such as the Standard & Poor’s 500 Index (S&P 500).  An Index fund can provide broad market exposure at a low operating expense with low portfolio turnover.  Index funds follow a passive investment strategy, for regardless of what is occurring in the markets the Index will maintain the strict rules or standards of the market index it is tracking.

top


 Inflation

A persistent and measurable increase in the general level of prices.  Calculated in the U.S. by the Bureau of Labor Statistics by measuring the price of a basket of goods and services to compute, among other statistics, the Consumer Price Index (CPI).

top


 Investment Objective

A written outline used by asset managers that quantifies an individual client’s risk tolerance and investment expectations.  Investment objectives usually place ranges on different asset classes (cash, stocks, bonds, other asset classes) to help customize a client’s portfolio to best achieve their long-term financial objectives of the client.

top


 Irrevocable Trust

A trust that is established by a living Grantor that irrevocably gives assets to a trust for specific family or charitable purposes, or a living trust that becomes irrevocable due to the death of the Grantor as they are the only person authorized to make changes to the trust document.

top


 Living Trust

A trust established by a living person, usually for their personal benefit during their lifetime.  The trust can be altered or amended freely during the Grantor’s lifetime, and provides for how the funds are to be disbursed upon the Grantor’s death. Certain privacy advantages can be achieved through living trusts, but consult your tax advisor for any potential tax advantages. 

top


 Net Rate of Return (Net ROR)

The gain or loss on an investment over a specified time period less any investment management fees charged.

top


 New York Stock Exchange (NYSE)

A stock exchange based in New York City that is considered the largest equities-based exchange in the world, based on the total market capitalization of its listed securities.

top


 Rate of Return (ROR)

The gain or loss on an investment over a specified time period, expressed as a percentage of the investment’s original cost.

top


 Risk Tolerance

The degree of variability in investment returns that an individual is willing to sustain while investing to achieve investment goals.  A client’s risk tolerance is key to determining the appropriate asset allocation for each individual’s portfolio. A greater risk profile has larger return/loss variability that should lead to greater net return although greater return is rarely guaranteed.  A lower risk profile normally leads to more consistent returns that over longer periods of time have a net lower return.

top


 Securities and Exchange Commission (SEC)

The commission created by Congress to regulate the securities markets and protect investors.  It is composed of five commissioners appointed by the President of the United States and confirmed by the US Senate.  Registered Investment Advisor (RIA) firms with assets under management (AUM) of $110 million or more are required to be registered under the SEC. Copper Harbor Investment Advisors, LLC is regulated and audited by the SEC.

top


 S&P 500

Hypothetical basket of stocks tracked by Standard and Poor’s Dow Jones Indices, LLC of 500 large US corporations to determine general stock market direction and trends.  Many times used as an Index to compare portfolio rates of return to the “market”.

top


 Suitability

A measure of appropriateness of a particular investment to a given investor.  Broker Dealers generally have to fulfill a suitability obligation to their clients, to make investment recommendations that are suitable given the client’s financial needs, objectives and individual circumstances. Suitability does not address the potential conflict between the client and the Broker-Dealer in terms of compensation.  Under a fiduciary standard an investment advisor would be prohibited from purchasing a mutual fund or other investment because it would garner the Advisor a higher fee or commission.  Under the suitability requirement this can be less clear, for as long as the investment is suitable for the client there are fewer barriers to purchase.  A Broker-Dealer is regulated by the Financial Industry Regulatory Authority (FINRA).

top


 Treasury Bills, Notes and Bonds

Debt instruments of the U.S. government. These borrowing are usually differentiated by the U.S. Treasury through length of maturity.  The issuance of shorter term securities called Bills mature in less than one year, Notes mature in 2 to 10 years and longer-term Bonds mature in 10 to 30 years. 

top


 Trust

A fiduciary relationship in which one party, known as the Grantor, gives another party, the Trustee, the right to hold property or assets for the benefit of a beneficiary.  Governed by a legal document, the trust will provide instructions for the trustee as to how to invest the assets within their care, and under what circumstances the assets are to be used for the beneficiary or under what conditions the assets are to be disbursed.

top


 U.S. Treasury

The U.S. Treasury is the government agency responsible for the finances of the U.S. including tax collection, assisting in bank regulation and issuing all government debt securities including U.S. Treasury bills, notes and bonds.  Since its creation in 1789 it has overseen the printing of currency and the minting of coins as well as monitoring other government agencies such as the Internal Revenue Service (IRS), the U.S. Mint, the Bureau of the Public Debt and the Secret Service.

top