Wealth Management Glossary

The excess return of an investment relative to a benchmark index, representing the value added (or subtracted) by active management.

The strategic distribution of investments across different asset classes to balance risk and reward according to an investor's goals and risk profile.

The total market value of investments that an advisor or firm manages on behalf of clients, often used as the basis for fee calculation.

A person or entity designated to receive assets from a trust, estate, retirement account, or insurance policy.

A measure of an investment's volatility relative to the overall market. A beta of 1 indicates market-level volatility; above 1 is more volatile; below 1 is less.

The profit realized from selling an investment for more than its purchase price, subject to capital gains tax at short-term or long-term rates.

A trust that provides income to the donor or beneficiaries for a specified period, with remaining assets going to a designated charity.

The original value of an investment for tax purposes, used to calculate capital gains or losses upon sale.

The strategy of spreading investments across multiple asset classes, sectors, and geographies to reduce the impact of any single investment's poor performance.

A charitable giving account that allows donors to make irrevocable contributions, receive tax deductions, and recommend grants to qualified charities over time.

The process of arranging for the management and transfer of a person's wealth during life and after death through wills, trusts, and other instruments.

A federal tax on the transfer of a deceased person's estate above a certain exemption threshold to heirs or beneficiaries.

A person or entity with a legal and ethical obligation to act in the best interest of another party, such as a client or beneficiary.

A federal tax on transfers of money or property to another person while receiving nothing or less than full value in return.

The person who creates and funds a trust, establishing its terms and transferring assets into the trust structure.

A trust that generally cannot be modified, amended, or revoked after its creation, removing assets from the grantor's taxable estate.

The ease with which an asset can be converted to cash without significantly affecting its price.

A computational technique that runs thousands of randomized scenarios to estimate the probability of achieving financial goals under varying market conditions.

The legal process of validating a will and administering a deceased person's estate through the court system, which can be time-consuming and public.

The process of realigning portfolio asset weights to target allocations by buying underweight and selling overweight asset classes.

A trust that can be changed or dissolved by the grantor during their lifetime, commonly used to avoid probate.

The transfer of assets from a traditional IRA or 401(k) to a Roth IRA, with taxes paid on the converted amount for future tax-free growth and withdrawal.

An adjustment to the cost basis of an inherited asset to its fair market value at the date of the owner's death, eliminating unrealized capital gains.

The person or institution responsible for managing trust assets according to the terms of the trust agreement on behalf of the beneficiaries.

The process of passing assets from one generation to the next through gifting, trusts, and estate planning strategies to minimize taxes and preserve family wealth.