We try to keep our documents clear and easily understood, but sometimes we have to use jargon which you may not have seen before.  This glossary is designed to help explain some of the technical terms we use.

A person who calculates the answers to financial problems, such as “What rate of return do I need to replace the benefits in my final salary scheme?”

Money paid to us in return for our services; either directly by you, or via a Product Provider.  Adviser Charges (also called fees) are agreed in advance between you and us.  Product Providers have no say in the matter.

A broad type of investment (such as UK company shares).

The mix of different investment types in your portfolio.  Identifying and maintaining the correct asset allocation is the key to a successful investment experience.

A term used as shorthand for the Financial Conduct Authority rule which obliges firms to take all reasonable steps to ensure the best possible result for clients when executing orders to buy or sell investments.

A level-6 international advanced professional designation which is renewed annually and is achieved by only a small number of UK financial planners.

A level-6 UK advanced professional designation (equivalent to Chartered Accountant status) achieved by only a minority of UK financial planners.

In the case of a SSAS: A loan made by the Managing Trustees (usually to the Company) which is secured against certain specified Company assets.

A firm acting as a fiduciary holds your assets in trust for you, in common with you and others.  (This is an important distinction from, say a bank holding your cash deposits or an insurance company’s with profits fund, where the ownership of the assets passes to the provider firm in exchange for a contractual promise).  Where a firm holds your assets as a co-fiduciary the assets are still legally yours.

Money paid to us by a product provider in return for placing your business with them.  Normally the amount of commission is set by the product provider and varies between products and product providers.  Commissions are banned for new retail investment products from 31/12/12, but may still be paid for existing investment and new non-investment insurance contracts

Critical illness cover is a type of insurance that pays out a lump sum if you get an illness severe enough to be covered by the policy.  Because advances in medicine mean people are surviving illnesses that used to kill us, critical illness cover has become popular as it pays out a one-off lump sum which you can spend how you want.

In the case of a SSAS:  A loan made by the Managing Trustees (usually to the Company) which is secured against unspecified assets not already secured against other debts the company may have.

A Discretionary Investment Manager agrees an investment strategy with you at the start and then buys and sells your investments as they see fit, updating you periodically.  PageRussell are not discretionary managers.  We provide an Advisory service, where we advise you to buy or sell an investment and only act when we have received your written instruction to do so.

A technique used to lower the total risk of loss in your investment portfolio by investing it in a range of different underlying investments.

Publicly traded shares in companies.

This normally refers to carrying out a trade in your investment portfolio.

The person responsible for the financial planning advice provided to you.

Publicly traded debt, normally issued by governments and large companies.

In the case of underwriting an insurance policy: A material fact is information which may alter the acceptance or terms on the policy offered by the insurance company.  It is vital you answer all the questions on the application carefully, to the best of your knowledge and belief.  Insurance companies do check the information you give them when you make a claim, and they can refuse to pay your claim if the information you give them is wrong.

The generic name for a wide variety of funds which invest in alternative assets (that is, not cash, fixed interest, equities or property).  They may use complex financial instruments to profit from other assets falling in price.  Hedge funds are usually unregulated by the Financial Conduct Authority and not covered by the Financial Services Compensation Scheme.

To use as security for a loan.

A Small Self-Administered pension Scheme where an insurance company acts as the Scheme Administrator.  In return for lower explicit Scheme Administration fee you make a minimum contribution into the insurance company’s funds (so there would be less cash available for self-investment).

Independent Financial Advisers assess a sufficient range of investment products available on the market with a diverse range of products and providers to ensure a client’s investment objectives can be met suitably.  The advice is not limited to products provided by the firm, a provider with close links, or any legal, economic or contractual relationship which would impair the independence of the advice.

A tax-efficient financial product which now comes in several forms with different rules and allowances:

• “Basic” ISA: The ISA most people know. It can hold cash or stocks and shares and is available to anyone aged 18 or over (or 16 or over if only cash is held).
• Help-to-Buy ISA: Holders of this regular saving plan can claim a bonus from the Government is the fund is used to buy a first home. New Help-to-Buy ISA can be opened until 30^th November 2019.
• Inheritance ISA: This name is sometimes used for ISAs that are inherited from a dead spouse or partner.
• Innovative Finance ISA: The ISA available to anyone age 18 or over is designed to hold peer-to-peer lend or crowdfunding investments.
• Junior ISA: Can hold cash or stocks and share and are available from birth and coverts to a “basic” ISA on the child’s 18th birthday. (The Junior ISA replaced the Child Trust Fund).
• Lifetime ISA: Anyone age 18 to 40 years can open a Lifetime ISA and get a 25% government bonus provide the money is used to buy a first home or withdrawn after the age of 60.

A firm that arranges a financial product, sourced from a Product Provider.  This includes IFAs and restricted firms.  Some Product Providers offer their products direct to the public on more favourable terms.

The term used to describe how easy it is to buy or sell an investment.

The Financial Conduct Authority splits the retail financial products it regulates into three categories:

• Investments;
• Non-investment insurance; and
• Mortgages

Many insurance-based contracts have an investment element and are regulated as investments.  Non-investment insurance covers all the other pure protection contracts and general insurance (such as motor insurance).

At the selected retirement age for your pension fund, your current pension provider will normally offer you the chance to buy a regular pension income (called an annuity) with them.  You have the right to take your pension fund and buy an annuity on the open market; this is an Open Market Option.

Describes a life insurance or pension contract where the regular payment has stopped and no more payments are made.

Insurance which can be included in or separate to another financial product to which you make regular payments (such as a loan).  If you are unable to pay the regular payments due to an accident, sickness or unemployment this insurance is designed to pay the regular payments for you.

The document issued by the product provider specifying the terms of the financial product.  The policy document is an important legal document.

The bank, building society, insurance company or investment fund manager, or another firm, which provides the financial product we advise on or arrange.

A financial product providing insurance only, with no investment element.

Any adviser who is not an Independent Financial Adviser.

When we carry out activities regulated by the Financial Conduct Authority we must categorise our clients.  PageRussell clients are almost always Retail Clients and receive a higher level of regulatory protection than the other categories (Professional Clients and Eligible Counterparties).

A loan in which the borrower pledges some asset as collateral for the loan, which then becomes a secured debt owed to the lender.  If the borrower defaults on the loan repayments, the lender can take possession of the asset used as collateral and may sell it to regain the amount originally lent.

The individual underlying investments held in your investment portfolio such as shares in a public company or UK government bonds.

A Small Self-Administered (pension) Scheme is a scheme where a group of people can pool their pension funds to make their own investments in shares, commercial property or make loans to third parties, such as their company.

A Self-Invested Personal Pension is a personal pension fund which an individual can use to make their own investments in shares, commercial property (instead of solely relying on the skill of investment fund managers).

You can appoint an Independent Financial Adviser as the Servicing Agent for a product.  The Product Provider will usually take instructions from, copy correspondence and may pay commission to that firm (if applicable).  Product Providers only allow one firm to be Servicing Agent at a time.  Unless you specify otherwise, this will be the firm through which sold you the product.

A financial product paid for by one, rather than a series of regular, payments.

The company which sets up a pension scheme for their employees.

An investment contract can be thought of as having two parts: the tax wrapper and the underlying investment.  The tax wrapper determines how the underlying investments are treated by HM Revenue & Customs.  ISAs and pensions are different examples of tax wrapper.

A pension scheme used by an employer to comply with the workplace pension regulations.  It will usually be a qualifying scheme into which eligible workers are automatically enrolled.

An administration service which allows you to hold a wide range of underlying investments and tax wrappers together in one place.