The wealth management glossary

A 3(21) fiduciary is an adviser who provides investment recommendations to an ERISA retirement plan, named for the fiduciary definition in Section 3(21) of ERISA, while the plan sponsor keeps final decision authority.

Because the sponsor makes the decisions, it shares fiduciary responsibility for investment selection with the 3(21) adviser.

Guide: 3(21) and 3(38) fiduciaries: who carries a 401(k) plan's investment decisionsNews: Retirement plan advisorsSee 3(38) FiduciarySee Fiduciary DutySource: U.S. Code (29 U.S.C. 1002) ↗

A 3(38) fiduciary is an investment manager, as defined in Section 3(38) of ERISA, who takes discretionary authority to select and monitor a retirement plan's investments.

The manager must be a registered investment adviser, bank or qualifying insurance company and must acknowledge its fiduciary status in writing, which shifts much of the investment responsibility away from the plan sponsor.

Guide: 3(21) and 3(38) fiduciaries: who carries a 401(k) plan's investment decisionsNews: Retirement plan advisorsSee 3(21) FiduciarySee Fiduciary DutySee Registered Investment Adviser (RIA)Source: U.S. Code (29 U.S.C. 1002) ↗

A 12b-1 fee is an annual charge deducted from mutual fund assets to pay for distribution and shareholder services, often passed to the selling broker as a trail.

The name comes from the SEC rule permitting the payments. Advisers that receive 12b-1 fees face conflict-of-interest scrutiny, and share class selection has been a recurring SEC enforcement focus.

News: Fees & pricingSee Revenue SharingSee Brokerage AssetsSource: Investor.gov (SEC) ↗

ACATS, the Automated Customer Account Transfer Service, is the DTCC system that standardizes and automates the movement of customer account assets between broker-dealers and banks.

The receiving firm initiates the transfer and the delivering firm validates it. Some assets, such as proprietary funds or certain alternatives, cannot move through ACATS and must be liquidated or held at the old firm.

Guide: ACATS and repapering: the mechanics of moving client accounts to a new firmNews: BreakawaysSee FINRA Rule 11870See RepaperingSee CustodianSee Clearing FirmSource: DTCC ↗

An accredited investor is an individual or entity meeting SEC income, net worth, professional-license or institutional tests that allow participation in many private securities offerings.

For individuals, tests include net worth above $1 million excluding a primary residence, income above set thresholds, or holding a Series 7, 65 or 82 license in good standing.

News: Alternatives & private marketsSee Qualified ClientSee Alternative InvestmentsSource: Investor.gov (SEC) ↗

Advisory assets are client assets held in fee-based advisory accounts, where clients pay an ongoing asset-based fee rather than transaction commissions.

Firms track the share of total client assets in advisory accounts as a measure of recurring revenue.

Guide: Fee-only or fee-based: how each kind of advisor is paid, and why the label mattersSee Brokerage AssetsSee Recurring RevenueSee Assets Under Management (AUM)See Fee-Based

Alternative investments are assets outside traditional public stocks, bonds and cash, such as private equity, private credit, hedge funds, real estate and commodities.

They are often less liquid, more complex and more expensive than traditional investments, and many are limited to accredited or qualified investors.

News: Alternatives & private marketsSee Interval FundSee Non-Traded REITSee Business Development Company (BDC)See Private CreditSee Accredited Investor

An annuity is a contract with an insurance company that can provide tax-deferred growth and a stream of income, often for life, in exchange for a lump sum or payments.

Variable and registered index-linked annuities are securities sold by registered representatives, while fixed annuities are generally regulated as insurance products. Many carry surrender charges.

News: Retirement plan advisorsSee Brokerage AssetsSee Regulation Best Interest (Reg BI)Source: Investor.gov (SEC) ↗

Assets under advisement (AUA) are client assets an advisor advises on but does not have discretionary or continuous management over, such as held-away accounts or retirement plan assets.

Firms sometimes report AUA alongside AUM, but it generally cannot be counted as regulatory AUM.

See Assets Under Management (AUM)See Regulatory Assets Under Management (RAUM)

Assets under management (AUM) is the market value of client assets an advisor or firm manages, often used to measure size and to calculate asset-based fees.

Definitions vary between firms. Regulatory AUM on Form ADV follows specific SEC rules, while marketing figures may include assets under advisement or other categories.

See Regulatory Assets Under Management (RAUM)See Assets Under Advisement (AUA)See Fee-BasedSee Basis Points (bps)

A backend bonus is a recruiting payment an advisor earns after joining a new firm by hitting growth targets, such as asset or revenue hurdles, within specified time periods.

Backend bonuses are often structured as additional forgivable loans, so the same repayment terms can apply if the advisor leaves early.

News: Recruiting dealsSee Transition PackageSee Forgivable LoanSee Trailing 12 (T12)

Basis points (bps) are units of one hundredth of a percentage point, so 100 basis points equal 1%, commonly used to quote fees and rates.

An advisory fee of 1% of assets, for example, is 100 basis points.

News: Fees & pricingSee Assets Under Management (AUM)See Wrap Fee

A book of business is the set of client relationships, assets and revenue an advisor serves, the basis for measuring practice size, recruiting offers and sale value.

Who owns the book, the advisor or the firm, depends on the affiliation model and contracts and is central to transition and succession disputes.

See Trailing 12 (T12)See Succession PlanSee Sunset Deal

A branch office is any location where a broker-dealer's associated persons regularly conduct securities business or hold themselves out as doing so, unless a FINRA Rule 3110 exclusion applies.

Branch offices are registered on Form BR. FINRA distinguishes supervisory and non-supervisory branches, which carry different inspection cycles, and allows certain residences to be treated as non-branch locations.

See Office of Supervisory Jurisdiction (OSJ)See Form BRSee FINRA Rule 3110Source: FINRA ↗

A breakaway is an advisor or team that leaves an employee-model firm, typically a wirehouse or regional broker-dealer, to go independent, often by forming or joining an RIA.

Breakaways must manage client notification, contract restrictions, account transfers and repapering while building or adopting new operations and technology.

Guide: Breakaway advisors: the anatomy of a wirehouse exitNews: BreakawaysSee WirehouseSee Registered Investment Adviser (RIA)See Broker ProtocolSee RepaperingSee ACATSSee Transition Package

The Broker Protocol is a 2004 agreement among participating firms that lets a departing advisor take limited client contact information to a new signatory firm without facing trade-secret litigation over it.

Advisors must follow its procedures, including giving written resignation with a list of clients. Several large firms, including Morgan Stanley and UBS, withdrew in 2017, so protection depends on both firms being signatories.

Guide: The Broker Protocol: what a departing advisor may take, and which firms are in itNews: BreakawaysSee Non-Solicit AgreementSee Temporary Restraining Order (TRO)See BreakawaySee Garden LeaveSource: J.S. Held (Broker Protocol signatory list) ↗

A broker-dealer is a firm that buys and sells securities for customers (as broker) or for its own account (as dealer), registered with the SEC and generally a FINRA member.

Broker-dealers recommending securities to retail customers must follow Regulation Best Interest. Their representatives register through Form U4 and appear on BrokerCheck.

Guide: RIA or broker-dealer: regulation, conduct standards and pay comparedSee Registered Investment Adviser (RIA)See Regulation Best Interest (Reg BI)See FINRASee Registered RepresentativeSee Independent Broker-Dealer (IBD)Source: Investor.gov (SEC) ↗

Brokerage assets are client assets held in commission-based brokerage accounts, where the advisor is paid per transaction or through product compensation such as trails.

Brokerage recommendations to retail customers fall under Reg BI rather than the adviser fiduciary standard.

Guide: Fee-only or fee-based: how each kind of advisor is paid, and why the label mattersSee Advisory AssetsSee 12b-1 FeeSee Regulation Best Interest (Reg BI)

BrokerCheck is FINRA's free public database showing the registration, employment history, licenses and disclosures, such as complaints, arbitrations and regulatory actions, of brokers and brokerage firms.

Its data comes from CRD filings including Forms U4 and U5, and it also displays basic information on investment advisers from the SEC's IAPD.

Guide: Vetting a financial advisor: a BrokerCheck and IAPD walkthroughSee CRDSee IAPDSee Form U4See Form U5See ExpungementSource: FINRA ↗

A business development company (BDC) is a type of closed-end investment company that primarily lends to or invests in small and mid-sized private U.S. businesses.

BDCs can be publicly traded, publicly registered but non-traded, or privately offered, and non-traded BDCs offer limited liquidity. They are a common vehicle for private credit.

News: Alternatives & private marketsSee Private CreditSee Interval FundSee Alternative InvestmentsSource: Investor.gov (SEC) ↗

A cash sweep is an arrangement that automatically moves uninvested cash in a brokerage or advisory account into a bank deposit or money market fund chosen by the firm.

Sweep programs can be a significant revenue source for firms, and the rates paid to clients have drawn litigation and regulatory scrutiny in recent years.

News: Fees & pricingSee Revenue SharingSee Custodian

CFA, or Chartered Financial Analyst, is a charter awarded by CFA Institute to candidates who pass three exam levels in investment analysis and meet work-experience and membership requirements.

The program emphasizes investment management, portfolio construction and ethics and typically takes several years to complete.

See CFP (Certified Financial Planner)See ChFC (Chartered Financial Consultant)Source: CFA Institute ↗

CFP, or Certified Financial Planner, is a professional certification awarded by CFP Board to those who meet education, exam, experience and ethics requirements in comprehensive financial planning.

CFP professionals must act as fiduciaries when providing financial advice under CFP Board's Code of Ethics and Standards of Conduct.

See ChFC (Chartered Financial Consultant)See CFA (Chartered Financial Analyst)See Fiduciary DutySource: CFP Board ↗

ChFC, or Chartered Financial Consultant, is a financial planning designation awarded by The American College of Financial Services after required coursework, experience and ethics commitments.

Its curriculum overlaps heavily with CFP education requirements, but it does not require a single comprehensive board exam.

See CFP (Certified Financial Planner)See CFA (Chartered Financial Analyst)Source: The American College of Financial Services ↗

A clawback is a contract provision letting a firm recover compensation already paid, such as unforgiven loan balances, bonuses or deferred pay, if an advisor leaves early or breaches terms.

News: Recruiting dealsSee Forgivable LoanSee Promissory NoteSee Deferred CompensationSee Earnout

A clearing firm is a broker-dealer that settles trades, holds customer accounts and maintains records on behalf of introducing broker-dealers that do not carry accounts themselves.

Most independent broker-dealers rely on a clearing firm, and changing clearing firms can require moving every account. Advisors' account transfer timelines often depend on the clearing firm involved.

News: Custody & platformsSee CustodianSee Broker-DealerSee ACATSSee Negative Consent

A continuation vehicle is a new fund created by a private equity sponsor to buy a portfolio company from one of its older funds, letting the sponsor keep owning the company.

Existing fund investors can cash out or roll into the new vehicle. Several PE-backed wealth management firms have used continuation vehicles.

Guide: Private equity's wealth management buying spree: who owns what, and whyNews: RIA M&ASee Private EquitySee Recapitalization

A corporate RIA is a registered investment adviser owned by a broker-dealer or other firm that affiliated advisors use for fee-based accounts instead of forming their own RIA.

Advisors on a corporate RIA generally give up some payout and control in exchange for not having to run their own compliance program. Moving to an advisor-owned RIA is a common step in going independent.

See Registered Investment Adviser (RIA)See Hybrid RIASee Independent Broker-Dealer (IBD)

CRD, the Central Registration Depository, is the licensing and registration database FINRA operates for the securities industry, holding records of firms, branches and registered individuals.

Each registered person receives a CRD number that follows them throughout their career. BrokerCheck displays much of this information publicly.

See BrokerCheckSee Form U4See Form U5See Form BRSee FINRASource: FINRA ↗

A custodian is a financial institution, usually a bank or broker-dealer, that holds client assets in safekeeping, executes and settles trades and sends account statements on behalf of RIAs.

Under the SEC custody rule, advisers that have custody of client funds or securities must generally keep them with a qualified custodian. Custodians also provide RIAs with trading, technology and service platforms.

Guide: RIA custodians: how custody works, and how Schwab, Fidelity and the rest compareNews: Custody & platformsSee Custody RuleSee Registered Investment Adviser (RIA)See Clearing FirmSee ACATS

The custody rule is SEC Rule 206(4)-2 under the Investment Advisers Act, which sets safeguards when an adviser holds or can access client funds or securities.

Requirements generally include keeping assets with a qualified custodian, ensuring clients receive custodian statements and, in many cases, an annual surprise examination by an independent accountant. Standing letters of authorization and fee deduction raise frequent custody questions.

Guide: The SEC custody rule: when an RIA has custody, and what followsNews: Custody & platformsSee CustodianSee Registered Investment Adviser (RIA)See Form ADVSource: SEC ↗

Deferred compensation is pay a firm awards an advisor but holds back for future vesting, which the advisor usually forfeits by leaving for a competitor before it vests.

Unvested deferred pay is a common consideration in transition talks, and recruiting firms sometimes factor it into offers.

News: Recruiting dealsSee WirehouseSee ClawbackSee Transition Package

Direct indexing is an investment approach that owns the individual securities of an index in a separately managed account rather than a fund, enabling customization and tax-loss harvesting.

Clients can exclude stocks for values or concentration reasons and realize losses on individual positions.

Guide: Direct indexing: the tax-loss harvesting case and its limitsNews: Tax managementSee Tax-Loss HarvestingSee Separately Managed Account (SMA)See Wash Sale

A dual registrant is a firm registered both as a broker-dealer and as an investment adviser, or an individual registered as both a broker representative and an investment adviser representative.

Dually registered firms must explain both kinds of services and their conflicts in Form CRS. Hybrid RIA advisors are often dually registered individuals.

Guide: RIA or broker-dealer: regulation, conduct standards and pay comparedSee Broker-DealerSee Registered Investment Adviser (RIA)See Hybrid RIASee Form CRSSource: SEC ↗

An earnout is a portion of an acquisition price paid after closing only if the acquired firm meets agreed targets, such as revenue, asset retention or growth.

Earnouts bridge valuation gaps between buyers and sellers and help keep advisors engaged after a sale.

Guide: RIA valuations: multiples, deal structures and what moves the priceNews: RIA M&ASee EBITDASee Succession PlanSee Tuck-In Acquisition

EBITDA, or earnings before interest, taxes, depreciation and amortization, is a measure of operating cash flow used to value advisory firms, often as a multiple in acquisitions.

In RIA deals, buyers frequently adjust EBITDA for owner compensation and one-time items. Valuation multiples vary with size, growth and deal structure.

Guide: RIA valuations: multiples, deal structures and what moves the priceNews: RIA M&ASee Recurring RevenueSee Minority StakeSee RIA AggregatorSee Earnout

An ensemble practice is an advisory firm or team in which multiple advisors share clients, revenue, staff and ownership rather than each running a separate book of business.

Ensembles are often viewed as better positioned for succession and valuation than solo practices because client relationships and cash flow do not depend on one person.

News: SuccessionSee Succession PlanSee Book of BusinessSee Solo Practice

Expungement wipes a customer complaint or dispute from a broker's CRD file, so it no longer shows on BrokerCheck. Under FINRA Rule 2080, a broker usually needs either a court order or a court-confirmed arbitration award to get it done.

FINRA describes expungement as an extraordinary remedy and tightened the arbitration procedures for requests in 2023.

News: RegulationSee BrokerCheckSee CRDSee Form U4See Form U5See FINRA ArbitrationSource: FINRA ↗

A family office is an organization that manages investments and often taxes, estate planning and administration for a single wealthy family, and may be exempt from SEC adviser registration.

The SEC's family office rule excludes an office from the Investment Advisers Act if it serves only family clients, is wholly owned and controlled by them and does not hold itself out to the public as an adviser.

News: Family officesSee Multi-Family Office (MFO)See Registered Investment Adviser (RIA)Source: SEC ↗

Fee-based describes advisory compensation charged as an ongoing fee, but the term is also used for advisors who earn both fees and commissions.

Because the term is used loosely, fee-based advisors may be dually registered and earn commissions on some products.

Guide: Fee-only or fee-based: how each kind of advisor is paid, and why the label mattersNews: Fees & pricingSee Fee-OnlySee Advisory AssetsSee Hybrid RIASee Dual Registrant

Fee-only describes an advisor compensated solely by fees paid directly by clients, such as asset-based, flat or hourly fees, with no commissions from product sales.

The CFP Board restricts use of the term by CFP professionals to those who meet its definition.

Guide: Fee-only or fee-based: how each kind of advisor is paid, and why the label mattersNews: Fees & pricingSee Fee-BasedSee Fiduciary DutySee CFP (Certified Financial Planner)

Fiduciary duty is the legal obligation of an investment adviser to act in the client's best interest, comprising a duty of care and a duty of loyalty, across the entire relationship.

The SEC's 2019 interpretation describes the duty as principles-based, requiring full and fair disclosure of conflicts and informed consent. Separate fiduciary standards apply to retirement plan advice under ERISA.

Guide: Reg BI and the fiduciary duty: two standards of conduct, side by sideSee Registered Investment Adviser (RIA)See Regulation Best Interest (Reg BI)See 3(21) FiduciarySee 3(38) FiduciarySee Fee-OnlySource: SEC ↗

FINRA, the Financial Industry Regulatory Authority, is the self-regulatory organization that writes and enforces rules for broker-dealers and their registered representatives under SEC oversight.

FINRA examines member firms, administers qualification exams, runs the CRD and BrokerCheck systems and operates the largest securities arbitration forum in the U.S. It does not regulate investment advisers.

News: RegulationSee Broker-DealerSee CRDSee BrokerCheckSee FINRA ArbitrationSource: FINRA ↗

FINRA arbitration is the dispute resolution forum FINRA runs for securities disputes, including customer claims and industry disputes between firms and advisors over promissory notes, U5 language and departures.

Member firms and registered persons are generally required to arbitrate industry disputes there. Arbitrators' decisions are binding and subject to only limited court review.

News: BreakawaysSee Promissory NoteSee Temporary Restraining Order (TRO)See Form U5See ExpungementSource: FINRA ↗

FINRA Rule 3110 is the core supervision rule requiring broker-dealers to maintain a supervisory system, written procedures, designated principals and inspections reasonably designed to ensure compliance.

The rule defines office types such as OSJs and branch offices, sets inspection cycles and includes provisions for residential supervisory locations.

News: RegulationSee Office of Supervisory Jurisdiction (OSJ)See Branch OfficeSee Series 24See Form BRSource: FINRA ↗

FINRA Rule 11870 is the customer account transfer rule that requires carrying and receiving firms to expedite and coordinate transfers of customer accounts within set timeframes once a customer authorizes it.

Its timeframes are aligned with the ACATS system. It also addresses assets that cannot be transferred, such as certain proprietary products.

Guide: ACATS and repapering: the mechanics of moving client accounts to a new firmNews: BreakawaysSee ACATSSee RepaperingSee Negative ConsentSource: FINRA ↗

A forgivable loan is upfront recruiting money paid to an advisor under a promissory note, with the balance forgiven in installments as long as the advisor stays with the firm.

If the advisor leaves before the loan is fully forgiven, the remaining balance generally becomes due, and firms often pursue unpaid amounts in FINRA arbitration.

Guide: Forgivable loans: the note behind every recruiting packageNews: Recruiting dealsSee Promissory NoteSee Transition PackageSee ClawbackSee FINRA Arbitration

Form ADV is the registration and disclosure form investment advisers file with the SEC or states, covering their business, ownership, clients, assets, fees, conflicts and disciplinary history.

Part 1 is filed as structured data, Part 2 is the client brochure and brochure supplement, and Part 3 is Form CRS. Advisers must update it at least annually and are publicly searchable on IAPD.

Guide: Reading a Form ADV: what an investment adviser's filing disclosesSee Form ADV Part 2ASee Form ADV Part 2BSee Form CRSSee IAPDSee Registered Investment Adviser (RIA)See Regulatory Assets Under Management (RAUM)Source: SEC ↗

Form ADV Part 2A is the plain-English brochure an investment adviser must give clients describing its services, fees, conflicts of interest, disciplinary history and business practices.

Advisers sponsoring wrap fee programs prepare a separate wrap fee program brochure under Appendix 1 of Part 2A.

Guide: Reading a Form ADV: what an investment adviser's filing disclosesSee Form ADVSee Form ADV Part 2BSee Form CRSSee Wrap FeeSource: SEC ↗

Form ADV Part 2B is the brochure supplement that describes the education, business experience, disciplinary history and supervision of the individual advisory personnel who serve a client.

Guide: Reading a Form ADV: what an investment adviser's filing disclosesSee Form ADVSee Form ADV Part 2ASee Investment Adviser Representative (IAR)Source: SEC ↗

Form BR is the Uniform Branch Office Registration Form that broker-dealers use to register, amend or close branch offices with FINRA, the NYSE and participating states.

The form identifies whether a branch is an OSJ and names its supervisor or person in charge. Opening a new office during a transition often requires a Form BR filing.

See Branch OfficeSee Office of Supervisory Jurisdiction (OSJ)See Form U4Source: FINRA ↗

Form CRS is the short client relationship summary that SEC-registered investment advisers and broker-dealers must give retail investors, describing services, fees, conflicts, standard of conduct and disciplinary history.

It was adopted in 2019 with Regulation Best Interest and is also known as Form ADV Part 3 for advisers. It follows a prescribed question-and-answer format.

Guide: Form CRS: the two-page summary every retail client is owedSee Regulation Best Interest (Reg BI)See Form ADVSee Dual RegistrantSource: SEC ↗

Form U4 is the Uniform Application for Securities Industry Registration or Transfer, which firms file to register representatives and which records their employment history and disclosure events.

Individuals must keep their U4 current, generally amending it within 30 days of a reportable event such as a customer complaint, regulatory action, bankruptcy or certain criminal charges. Much of it feeds BrokerCheck.

News: RegulationSee Form U5See CRDSee BrokerCheckSee Registered RepresentativeSee ExpungementSource: FINRA ↗

Form U5 is the Uniform Termination Notice a firm files within 30 days after a registered person leaves, stating the termination reason and answering disclosure questions about the departure.

The firm must give the individual a copy. Termination explanations and disclosures can appear on BrokerCheck, and disputes over U5 language are often taken to FINRA arbitration.

Guide: Form U5: the termination filing that follows an advisor's recordNews: BreakawaysSee Form U4See BrokerCheckSee ExpungementSee FINRA ArbitrationSource: FINRA ↗

Garden leave is a period, set by an employment contract, during which a departing advisor remains on the payroll but must stop working and cannot yet join a competitor or contact clients.

Notice and garden leave provisions can delay when an advisor may start at a new firm and are scrutinized closely in transition planning.

News: BreakawaysSee Non-Solicit AgreementSee Broker ProtocolSee Breakaway

Gross dealer concession (GDC) is the total revenue an advisor generates for the firm, including commissions and advisory fees, before the advisor's payout is applied.

GDC and production are used interchangeably in brokerage to measure advisor size and drive payout tiers and recruiting packages.

Guide: Financial advisor pay: what government data and firm payout grids showSee Payout GridSee Trailing 12 (T12)

A hybrid RIA is an advisory practice that runs its own registered investment adviser while its advisors also stay registered with an unaffiliated broker-dealer for commission-based business.

The structure lets advisors keep fee-based advisory assets under their own RIA while still selling commission products such as annuities through the broker-dealer, which then supervises that brokerage activity.

Guide: The hybrid RIA: how it differs from a dual registrant and a pure RIANews: Hybrid RIAsSee Registered Investment Adviser (RIA)See Dual RegistrantSee Independent Broker-Dealer (IBD)See Fee-Based

IAPD, the Investment Adviser Public Disclosure website, is the SEC's free public database of registered and exempt reporting investment advisers, their Form ADV filings and their representatives' records.

It draws on the Investment Adviser Registration Depository (IARD) and state filings for individual IARs.

Guide: Vetting a financial advisor: a BrokerCheck and IAPD walkthroughSee BrokerCheckSee Form ADVSee Registered Investment Adviser (RIA)See CRDSource: Investor.gov (SEC) ↗

An independent broker-dealer (IBD) is a brokerage firm whose advisors work as independent contractors, running their own practices while the firm provides registration, supervision, clearing and technology.

IBD advisors typically pay their own office and staff costs in exchange for a higher payout than employee-model firms. Many IBDs also sponsor a corporate RIA that advisors can use for fee-based business.

Guide: Changing broker-dealers: the filings, the timeline and where moves stallSee Broker-DealerSee WirehouseSee Independent ContractorSee Office of Supervisory Jurisdiction (OSJ)See Corporate RIASee Payout Grid

An independent contractor advisor is affiliated with a broker-dealer or RIA platform under a contract rather than employed, and typically owns their business and pays their own expenses.

Independent contractors usually receive 1099 tax forms and higher payouts than W-2 employee advisors. The model is the norm at independent broker-dealers.

See Independent Broker-Dealer (IBD)See WirehouseSee Payout Grid

An interval fund is a closed-end fund that does not trade on an exchange and instead offers to repurchase a limited percentage of its shares at set intervals.

Repurchase offers typically occur quarterly, semiannually or annually and cover 5% to 25% of outstanding shares, so investors may not be able to sell all the shares they want.

Guide: Interval and tender-offer funds: the wrappers bringing private markets to advisorsNews: Alternatives & private marketsSee Alternative InvestmentsSee Private CreditSee Business Development Company (BDC)Source: Investor.gov (SEC) ↗

An investment adviser representative (IAR) is an individual who gives advice, manages accounts, or solicits advisory clients on behalf of an investment adviser, and is generally registered at the state level.

States usually require IARs to pass the Series 65, or the Series 66 together with the Series 7, and register through Form U4.

See Registered Investment Adviser (RIA)See Series 65See Series 66See Form U4See Registered RepresentativeSource: NASAA ↗

The marketing rule is SEC Rule 206(4)-1, which governs investment adviser advertisements, including testimonials, endorsements, third-party ratings and performance presentations.

Adopted in December 2020, it replaced the former advertising and cash solicitation rules, with compliance required from November 2022. It allows testimonials subject to disclosure and oversight conditions.

News: RegulationSee Registered Investment Adviser (RIA)See Form ADVSource: SEC ↗

A minority stake is an ownership interest of less than 50% in an advisory firm, often sold to a private equity firm or strategic investor, that leaves founders in control.

Minority deals give owners liquidity and growth capital without ceding control, though investors often negotiate governance rights.

Guide: Private equity's wealth management buying spree: who owns what, and whyNews: RIA M&ASee Private EquitySee RecapitalizationSee EBITDASee RIA Aggregator

A model portfolio is a predefined allocation of funds or securities, built by an asset manager, strategist or the advisor's firm, that advisors apply across client accounts.

Models standardize investment management, and many asset managers distribute them to advisors through model marketplaces and TAMPs.

News: TAMPs & model portfoliosSee TAMPSee Separately Managed Account (SMA)See Unified Managed Account (UMA)

A multi-family office (MFO) is a firm that provides family-office-style investment, tax, estate and administrative services to several unrelated wealthy families, typically as a registered investment adviser.

Because it serves more than one family, an MFO generally cannot rely on the SEC's family office exclusion. SEC staff have said that sharing investment staff across families can create a de facto multi-family office.

News: Family officesSee Family OfficeSee Registered Investment Adviser (RIA)Source: SEC ↗

Negative consent is a method of moving or changing customer accounts in bulk by notifying clients in advance and treating their silence as approval unless they object.

FINRA's 2026 Regulatory Notice 26-03 consolidates its guidance on when negative consent letters may be used for bulk transfers, such as clearing firm changes or mergers. Individual advisor moves generally require affirmative client consent.

Guide: ACATS and repapering: the mechanics of moving client accounts to a new firmNews: BreakawaysSee RepaperingSee ACATSSee FINRA Rule 11870See Clearing FirmSource: FINRA ↗

A non-solicit agreement is a contract clause that bars a departing advisor, for a set period, from soliciting the former firm's clients or employees.

Enforceability depends on the contract terms and state law, and outside the Broker Protocol firms may seek injunctions to enforce these clauses.

News: BreakawaysSee Broker ProtocolSee Temporary Restraining Order (TRO)See Garden Leave

A non-traded REIT is a real estate investment trust registered with the SEC but not listed on an exchange, so shares are bought from the sponsor and are difficult to sell.

Liquidity typically comes through limited share repurchase programs, and investors should watch fees, valuation methods and the source of distributions.

News: Alternatives & private marketsSee Alternative InvestmentsSee Interval FundSee Business Development Company (BDC)Source: Investor.gov (SEC) ↗

An office of supervisory jurisdiction (OSJ) is a broker-dealer office, defined under FINRA Rule 3110, where key supervisory functions occur, such as supervising other branches or approving retail communications.

An OSJ must be registered on Form BR, have a principal on site and be inspected at least annually. In the independent channel, OSJ owners often supervise other advisors and keep an override on their revenue.

Guide: The OSJ: FINRA's supervisory office and its role at a broker-dealerSee Super OSJSee Branch OfficeSee FINRA Rule 3110See Form BRSee OverrideSource: FINRA ↗

Organic growth is an advisory firm's growth in assets or revenue from new clients and new money from existing clients, excluding market performance and acquisitions.

It is often measured as net new assets as a percentage of beginning assets and is closely watched by buyers and investors.

News: RIA M&ASee Assets Under Management (AUM)See Tuck-In AcquisitionSee Recurring Revenue

An override is a share of affiliated advisors' revenue retained by an OSJ, branch manager or super OSJ in exchange for supervision, services and support.

Guide: OSJ overrides: how branch economics split an independent advisor's payoutSee Office of Supervisory Jurisdiction (OSJ)See Super OSJSee Payout Grid

A payout grid is the schedule a firm uses to set what percentage of an advisor's gross revenue the advisor keeps, usually rising with higher production levels.

Grids differ by channel: employee-model firms typically pay a lower percentage but cover expenses, while independent firms pay more but advisors fund their own overhead.

Guide: Payout grids compared: wirehouses, regionals and independent firmsSee Gross Dealer Concession (GDC)See Trailing 12 (T12)See OverrideSee WirehouseSee Independent Broker-Dealer (IBD)

Private credit is lending to companies by non-bank lenders, such as specialized funds, rather than through public bond markets or bank loans.

Advisors typically access private credit through BDCs, interval funds and other evergreen vehicles.

News: Alternatives & private marketsSee Business Development Company (BDC)See Interval FundSee Alternative Investments

Private equity is capital from investment funds that buy stakes in private companies, and in wealth management it backs many RIA aggregators, acquirers and service providers.

PE firms typically aim to grow and sell or recapitalize their holdings within several years, which influences how backed firms grow and are structured.

Guide: Private equity's wealth management buying spree: who owns what, and whyNews: RIA M&ASee RIA AggregatorSee Minority StakeSee RecapitalizationSee Continuation Vehicle

A promissory note is the written promise an advisor signs to repay recruiting or retention money, usually forgiven over time but accelerated if the advisor departs early.

FINRA's Code of Arbitration Procedure for Industry Disputes includes simplified procedures for firm claims that rest solely on an unpaid promissory note.

Guide: Forgivable loans: the note behind every recruiting packageNews: Recruiting dealsSee Forgivable LoanSee ClawbackSee FINRA ArbitrationSource: FINRA ↗

A qualified client is a client who meets SEC Rule 205-3 asset or net worth thresholds, allowing a registered investment adviser to charge them performance-based fees.

The SEC adjusts the dollar thresholds for inflation by order roughly every five years, so advisers should check the most recent order.

News: Alternatives & private marketsSee Accredited InvestorSee Registered Investment Adviser (RIA)Source: SEC ↗

A recapitalization is a restructuring of a firm's ownership and capital, such as bringing in new investors or debt, often so existing owners can sell part of their equity.

In wealth management, recaps commonly occur when a private equity-backed RIA or aggregator brings in new investors while existing backers roll over or sell stakes.

Guide: Private equity's wealth management buying spree: who owns what, and whyNews: RIA M&ASee Minority StakeSee Private EquitySee Continuation VehicleSee Rollover Equity

Recurring revenue is income that repeats predictably, such as asset-based advisory fees, as opposed to one-time transactional revenue such as commissions.

Buyers generally pay more for practices with a high share of recurring revenue, which makes it a key factor in valuations and succession deals.

Guide: RIA valuations: multiples, deal structures and what moves the priceNews: RIA M&ASee Advisory AssetsSee EBITDASee Assets Under Management (AUM)

A registered investment adviser (RIA) is a firm paid to give advice about securities that registers with the SEC or state regulators and owes clients a fiduciary duty.

Larger advisers generally register with the SEC and smaller ones with their home state, based mainly on regulatory assets under management. Individuals who give advice on an RIA's behalf are investment adviser representatives.

Guide: The RIA model: pure RIAs, hybrids and RIAs that own a broker-dealerSee Form ADVSee Fiduciary DutySee Investment Adviser Representative (IAR)See Regulatory Assets Under Management (RAUM)See Broker-DealerSource: Investor.gov (SEC) ↗

A registered representative is an individual associated with a broker-dealer who is registered with FINRA to sell securities, typically after passing the SIE and a representative-level exam such as the Series 7.

Registered representatives are often called brokers or stockbrokers, and their records appear on BrokerCheck.

See Broker-DealerSee Series 7See SIE ExamSee Form U4See BrokerCheckSource: FINRA ↗

Regulation Best Interest (Reg BI) is the SEC rule requiring broker-dealers to act in a retail customer's best interest, without putting their own interests ahead, when recommending securities or account types.

Reg BI took effect in June 2020 and consists of disclosure, care, conflict-of-interest and compliance obligations. It replaced FINRA suitability for covered retail recommendations.

Guide: Reg BI and the fiduciary duty: two standards of conduct, side by sideNews: RegulationSee Fiduciary DutySee Form CRSSee SuitabilitySee Broker-DealerSource: SEC ↗

Regulatory assets under management (RAUM) is the figure an adviser reports in Form ADV Item 5.F for securities portfolios it continuously and regularly supervises or manages, calculated under SEC instructions.

RAUM largely determines whether an adviser registers with the SEC or the states, and it can differ from the AUM a firm uses in marketing.

Guide: Reading a Form ADV: what an investment adviser's filing disclosesSee Assets Under Management (AUM)See Form ADVSee Registered Investment Adviser (RIA)See Assets Under Advisement (AUA)Source: SEC ↗

Repapering is the process of having clients sign new account applications, advisory agreements and transfer forms when their advisor moves to a new firm, custodian or broker-dealer.

It is often the most labor-intensive part of a transition, and firms increasingly use e-signature and pre-filled paperwork to speed it up.

Guide: ACATS and repapering: the mechanics of moving client accounts to a new firmNews: BreakawaysSee ACATSSee Negative ConsentSee Breakaway

Revenue sharing is a payment from a product sponsor, such as a fund company or insurer, to a broker-dealer or custodian for distribution, shelf space or support.

Because such payments can create conflicts in product recommendations, firms must disclose them under Reg BI and adviser disclosure rules.

News: Fees & pricingSee 12b-1 FeeSee Cash SweepSee Regulation Best Interest (Reg BI)

An RIA aggregator is a firm that acquires or takes stakes in many registered investment advisers, often with private equity backing, to build scale across shared services and capital.

Models range from fully integrated buyers that merge firms under one brand to partnership structures that let acquired firms keep their names and leadership. The terms consolidator and aggregator are often used interchangeably.

Guide: Aggregators, integrators and minority investors: the RIA buyer types comparedNews: RIA M&ASee Registered Investment Adviser (RIA)See Tuck-In AcquisitionSee Minority StakeSee Private EquitySee EBITDA

Rollover equity is the portion of a seller's proceeds reinvested as ownership in the acquiring firm or its parent rather than taken in cash.

Sellers of RIAs often roll over equity to align with the buyer and share in future gains, though its value depends on later liquidity events.

News: RIA M&ASee RecapitalizationSee RIA AggregatorSee Earnout

A separately managed account (SMA) is a portfolio of individual securities owned directly by the client and managed by a professional manager according to a specific strategy.

Unlike a fund, an SMA gives clients direct ownership, which allows customization and individual tax lot management.

News: TAMPs & model portfoliosSee Unified Managed Account (UMA)See Model PortfolioSee Direct IndexingSee Wrap FeeSee TAMP

The Series 7 is FINRA's General Securities Representative exam, which, together with the SIE, qualifies a person sponsored by a member firm to sell most types of securities.

Candidates must be sponsored by a FINRA member firm, and passing the exam alone does not register a person.

See SIE ExamSee Series 66See Series 24See Registered RepresentativeSource: FINRA ↗

The Series 24 is FINRA's General Securities Principal exam, which qualifies a person to supervise and manage a broker-dealer's securities business and its representatives.

Candidates need a representative-level registration, such as the Series 7, and OSJ and branch supervisors commonly hold it.

See Series 7See Office of Supervisory Jurisdiction (OSJ)See FINRA Rule 3110Source: FINRA ↗

The Series 65 is the Uniform Investment Adviser Law Exam, developed by NASAA and administered by FINRA, that most states require for individuals acting as investment adviser representatives.

It does not require firm sponsorship by a FINRA member or a co-requisite exam.

See Series 66See Investment Adviser Representative (IAR)See Series 7Source: FINRA ↗

The Series 66 is the Uniform Combined State Law Exam, which, paired with the Series 7, qualifies an individual to act as both a securities agent and an investment adviser representative.

See Series 65See Series 7See Investment Adviser Representative (IAR)See Dual RegistrantSource: FINRA ↗

The SIE, or Securities Industry Essentials exam, is FINRA's introductory test of basic securities industry knowledge and a co-requisite for representative-level exams such as the Series 7.

Unlike most FINRA exams, it can be taken without firm sponsorship by anyone 18 or older.

See Series 7See Registered RepresentativeSource: FINRA ↗

A solo practice is an advisory business built around a single advisor who personally holds most client relationships, sometimes with support staff but without partner advisors.

Solo practitioners face particular succession and continuity questions, which is one reason sunset deals and continuity agreements are common in this segment.

News: SuccessionSee Ensemble PracticeSee Sunset DealSee Succession Plan

A succession plan is a documented strategy for transferring an advisor's ownership, client relationships and leadership to successors when the advisor retires, becomes disabled or dies.

Plans may involve internal successors, an external sale or a sunset arrangement. Many firms pair them with continuity agreements for unexpected events.

Guide: Advisor succession: how sunset and retire-in-place deals are structuredNews: SuccessionSee Sunset DealSee Ensemble PracticeSee Book of BusinessSee Earnout

Suitability is the FINRA Rule 2111 standard requiring a broker to have a reasonable basis to believe a recommendation fits the customer's investment profile, including quantitative limits on excessive trading.

Since Reg BI took effect, Rule 2111 no longer applies to recommendations covered by Reg BI, but it still governs others, such as recommendations to some non-retail customers.

See Regulation Best Interest (Reg BI)See Fiduciary DutySource: FINRA ↗

A sunset deal is a retirement program in which a departing advisor transitions clients to successor advisors over several years in exchange for continued payments based on the book's revenue.

Wirehouses and other firms use these programs to retain client assets when advisors retire, and the payment terms generally depend on the advisor staying and not competing.

Guide: Advisor succession: how sunset and retire-in-place deals are structuredNews: SuccessionSee Succession PlanSee Book of BusinessSee Clawback

A super OSJ is a large office of supervisory jurisdiction that recruits, supervises and services many independent advisors under one broker-dealer, functioning like a firm within a firm.

Super OSJs often provide their own technology, marketing, investment platforms and transition support, and earn an override on affiliated advisors' revenue. They are sometimes called enterprises or networks.

Guide: Super OSJs and enterprises: inside the independent channel's largest branchesSee Office of Supervisory Jurisdiction (OSJ)See Independent Broker-Dealer (IBD)See OverrideSee Payout Grid

A TAMP, or turnkey asset management program, is an outsourced platform that gives advisors investment models, portfolio management, trading, rebalancing and reporting so they can delegate investment operations.

TAMPs typically charge an asset-based platform fee on top of the advisor's fee and any underlying fund or strategist costs.

Guide: TAMPs: how turnkey asset management platforms fit an advisory practiceNews: TAMPs & model portfoliosSee Model PortfolioSee Separately Managed Account (SMA)See Unified Managed Account (UMA)See Wrap Fee

Tax-loss harvesting is selling investments at a loss to offset realized capital gains, and potentially some ordinary income, while replacing them to keep a similar market exposure.

Replacement purchases must avoid the wash sale rule, and harvesting generally defers taxes rather than eliminating them.

News: Tax managementSee Wash SaleSee Direct IndexingSee Separately Managed Account (SMA)Source: IRS ↗

A temporary restraining order (TRO) is a short-term court order, sometimes sought against departing advisors, that bars actions such as soliciting clients or using client data while a dispute proceeds.

Under FINRA Rule 13804, parties to an industry dispute may seek temporary injunctive relief in court, with a hearing on permanent relief held before a FINRA arbitration panel.

News: BreakawaysSee Non-Solicit AgreementSee Broker ProtocolSee FINRA ArbitrationSource: FINRA ↗

Trailing 12, or T12, is an advisor's gross revenue production over the most recent 12 months, the standard measure recruiters use to size transition packages.

Offers are commonly quoted as a percentage of T12. Firms may also look at shorter recent periods, annualized, when production has changed sharply.

News: Recruiting dealsSee Transition PackageSee Gross Dealer Concession (GDC)See Payout Grid

A transition package is the compensation a recruiting firm offers an advisor to move, often combining an upfront forgivable loan, backend bonuses and other incentives sized against trailing production.

Packages are usually expressed as a percentage of trailing-12-month revenue, and their terms, including forgiveness schedules and clawbacks, vary widely by firm and channel.

Guide: Forgivable loans: the note behind every recruiting packageNews: Recruiting dealsSee Forgivable LoanSee Backend BonusSee Trailing 12 (T12)See Promissory NoteSee Clawback

A tuck-in acquisition is the purchase of a smaller advisory firm or team that is folded into the buyer's existing brand, operations and platform.

Tuck-ins are a common way for larger RIAs and aggregators to add assets and advisors without creating a new standalone business.

News: RIA M&ASee RIA AggregatorSee EarnoutSee Organic Growth

A unified managed account (UMA) is a single account that holds several investment vehicles and strategies, such as SMAs, mutual funds and ETFs, under one consolidated rebalancing and reporting structure.

An overlay manager typically coordinates the sleeves to manage risk and taxes across the whole account.

News: TAMPs & model portfoliosSee Separately Managed Account (SMA)See Model PortfolioSee TAMP

If an investor sells a security at a loss and buys it, or something substantially identical, back within 30 days on either side of the sale, the IRS treats it as a wash sale and the loss can't be claimed.

The disallowed loss is generally added to the cost basis of the replacement shares. Purchases in an IRA can also trigger the rule.

News: Tax managementSee Tax-Loss HarvestingSee Direct IndexingSource: IRS ↗

A wirehouse is a large national full-service brokerage firm, typically part of a major bank holding company, that employs its financial advisors as W-2 employees.

The term is most often applied to Morgan Stanley, Merrill, UBS and Wells Fargo. Wirehouse advisors usually earn a share of the revenue they generate under a firm-set payout grid and often receive deferred compensation.

Guide: Wirehouse or independent: pay, ownership and supervision side by sideNews: BreakawaysSee Independent Broker-Dealer (IBD)See BreakawaySee Payout GridSee Deferred CompensationSee Transition Package

A wrap fee is a single asset-based fee charged in a wrap program that bundles investment advice, trading and custody, rather than paying for each separately.

Advisers sponsoring wrap programs must deliver a wrap fee brochure. Depending on trading activity, a wrap fee can cost more or less than paying for services separately.

News: Fees & pricingSee Form ADV Part 2ASee Separately Managed Account (SMA)See TAMPSource: Investor.gov (SEC) ↗