Financial terms in plain English - Jargon busting the financial services industry
When you speak with financial advisers you often hear terms you aren’t familiar with. Below we have put together a list of these terms and what they mean in plain English.
A financial adviser who offers independent and unbiased advice, considering a wide range of financial products and providers in the market. Therefore, there is no incentive to favour one provider over another.
A financial adviser who provides advice on a limited range of products or from a limited number of providers.
The Financial Services Compensation Scheme is the UK’s statutory deposit insurance and investors compensation scheme for customers of authorised financial services firms. This means that FSCS can pay compensation if a firm is unable, or likely to be unable, to pay claims against it.
The process of gathering detailed information about a client’s financial circumstances, goals, and risk tolerance, which forms the basis for providing personalised advice.
The requirement for an adviser to recommend financial products and services that are suitable for the client’s needs, goals, and risk tolerance.
Conducting comprehensive research and analysis of various investment options and funds available in the market to make informed investment recommendations.
A standardised document that provides essential information about investment products to help investors understand the risks, costs, and potential returns.
An online service or portal that allows IFAs and clients to access and manage their investments and portfolios in one place.
The process of assessing a client’s attitude to risk and their capacity to bear investment risk in order to recommend suitable investment strategies.
Conducting research and due diligence on investment platforms to assess their suitability for clients, including factors such as costs, service, investment options, and technology. As well as the financial strength, and ongoing sustainability of the platform themselves.
Using software and tools to project a client’s future income, expenses, and financial goals to help in financial planning and retirement planning.
A marketplace where buyers and sellers trade securities, such as shares or stocks.
A tax-efficient savings and investment account available to UK residents, allowing them to save or invest a certain amount each year without paying tax on the interest or gains.
This type of ISA was created to help people save either for their first home or for later life i.e. retirement. The government will give you a bonus worth 25% of what you pay in, up to a set limit, every tax year.
A long-term savings account set up by a parent or guardian to save for their child’s future. JISAs are available to those who are not eligible to set up a child trust fund.
The Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) are UK government schemes designed to help smaller higher-risk trading companies raise finance, by offering a range of tax relief to investors who purchase new shares in those companies.
A venture capital trust or VCT is a tax efficient UK closed-end collective investment scheme designed to provide venture capital for small expanding companies, and income and/or capital gains for investors.
An annuity is an investment option that can provide a guaranteed income for an individual or their spouse throughout their retirement. They are purchased for a set period and payout a specific amount in retirement based on the purchase amount and the annuity rates at the time of purchase.
Flexi-access drawdown is a way of taking money out of your pension pot to live on in retirement. It can give you more flexibility over how and when you receive your pension.
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