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Reference

The vocabulary
of running a firm.

124 terms an independent advisory firm actually encounters — in operations, trading, billing, reporting, risk and compliance. Written plainly, with the part that usually goes unsaid.

Billing and revenue

Average daily balance Billing run Breakpoint Conflict of interest Effective rate Expense ratio Fee schedule Householding Proprietary product Revenue sharing Soft dollars Tiered fee Total cost of ownership Wrap fee

Compliance and regulation

Audit trail Basis for recommendation Books and records Entitlements Fiduciary duty Form ADV Form CRS Investment policy statement Marketing rule Prohibited transaction Proposal Regulation Best Interest Rollover rationale Testimonial and endorsement

Custody and data

Advisor code Custodian Custody Data portability Held-away assets Integration Limited power of attorney Onboarding Parallel run Repapering Single sign-on Transition

Firm structure

Aggregator Direct indexing Discretion Enterprise value Non-discretionary Outsourced chief investment officer (OCIO)Overlay management Rep as portfolio manager Separately managed account (SMA)Turnkey asset management platform (TAMP)Unified managed account (UMA)Values screen

Performance and reporting

Alpha Backtest Benchmark Beta Blended benchmark Book of record Client portal Composite Dollar-weighted return Exception report Performance report Survivorship bias Time-weighted return

Risk and suitability

Downside deviation Maximum drawdown Monte Carlo simulation Recovery period Required risk Risk capacity Risk tolerance Risk-free rate Sequence of returns risk Sharpe ratio Sortino ratio Standard deviation Suitability Up and down capture Volatility

Tax

Asset location Cost basis Realized gain or loss Tax lot Tax-loss harvesting Wash sale

Trading and execution

Best execution Block trade Corporate action Do-not-trade flag Order routing Price improvement Reconciliation Restriction Settlement Trade allocation policy Trade date Trade error Trade rotation