Financial services has its own vocabulary. Most of it exists for shorthand, some of it exists to confuse. Below are terms we use throughout our website, defined plainly.
A fiduciary is a person or firm legally required to place the interests of its clients above its own at all times. A fiduciary investment advisor must disclose conflicts of interest, avoid self-dealing, and recommend only what is in the client’s best interest. Woodard & Company has operated under this standard since 1985.
A fee-only firm is compensated exclusively by its clients through agreed-upon advisory fees. Fee-only advisors accept no commissions, revenue-sharing, soft-dollar arrangements, or referral payments from product providers, fund companies, or custodians. The result is advice untainted by outside incentive.
An investment firm registered with the United States Securities and Exchange Commission (or state securities regulators) and held to a fiduciary standard. Registered Investment Advisors file a detailed disclosure document known as Form ADV that describes the firm’s services, fees, and potential conflicts of interest.
The regulatory disclosure document a Registered Investment Advisor files with the SEC and provides to clients. Part 2A (the “Brochure”) describes the firm’s business, fee structure, services, conflicts of interest, and disciplinary history. Clients are encouraged to read it carefully before and during any advisory relationship.
An independent, qualified financial institution that holds client assets separately from the advisory firm. Every Registered Investment Advisor is required by the Investment Advisers Act of 1940 to use a third-party qualified custodian. Woodard & Company uses Fidelity Institutional.
The federal statute governing investment advisors in the United States. It establishes fiduciary duty, requires registration and disclosure, mandates third-party custody of client assets, and forms the framework within which Registered Investment Advisors operate today.
A nonprofit, member-funded organization that protects clients of brokerage firms in the event of the brokerage’s failure. SIPC coverage protects eligible securities and cash, up to defined limits, and is standard at major custodians such as Fidelity.
An investment approach in which the mix of stocks, bonds, and other assets within a portfolio of ETFs and institutional class shares of mutual funds is adjusted over time based on current market and economic conditions, rather than held to a fixed ratio indefinitely. The objective is to adjust risk exposure in response to evolving fundamentals. This approach also applies Portfolio Theory to adjust risk tolerance as quantified by volatility of various indices to meet client needs for risk/reward.
Woodard & Company’s equity investment strategy, in place since the firm’s founding in 1985. The portfolio holds a focused group of companies that lead their respective industries, selected with the intention of long-term ownership rather than frequent trading. The portfolio endeavors to allocate in a sector neutral manner relative to the S&P 500, which index is our objective to outperform.
Our term for financial planning that begins with the life the client wants to live, and works backward to the portfolio and cash-flow strategy that supports it. It is practical, ongoing, and coordinated across investments, taxes, retirement income, and estate considerations.
The group of advisors at Woodard & Company responsible for the firm’s investment decisions. Rather than any single advisor making allocation decisions in isolation, the committee meets twice weekly, and more often as market conditions warrant, to evaluate positioning, research new opportunities, and review existing holdings.
The independent federal agency responsible for regulating the United States securities industry and enforcing federal securities laws. The SEC oversees registered investment advisors, broker-dealers, mutual funds, and public companies.
The process by which shareholders vote on matters put before a company’s shareholders, such as board elections or governance proposals. Investment advisors who exercise voting authority on client accounts are required to maintain a written policy describing how votes are cast.
An arrangement under which a brokerage firm provides research or other services to an investment advisor in exchange for directed trading. Soft-dollar arrangements can create conflicts of interest. Woodard & Company pays for its research directly and does not accept soft-dollar benefits.
A unit of measure equal to one one-hundredth of one percent (0.01%). Used to describe small movements in rates and percentages: one hundred basis points equal one percent. A fee of 1.25% would be described as 125 basis points.
A grouping of similarly managed client accounts used to present the historical performance of an investment strategy. Composites are constructed according to regulatory guidelines to present fair, representative performance results and are subject to ongoing disclosure requirements.
This glossary is intended for educational purposes. Definitions are written for plain understanding, not as legal or regulatory definitions. For full regulatory definitions, please consult our Form ADV or the SEC’s Investor.gov.
We work best with clients who value discipline over drama, judgment over noise, and relationships that extend across generations. If that describes you, we would be glad to make your acquaintance.
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