The vocabulary of investment advice, defined the way a careful reader needs it. Use this as a reference companion to the reports.
If you've read a report on AdviserReport and hit a term you weren't sure about, this is where to find it. Definitions are written for someone evaluating an investment adviser. In the glossary we flag where these particular terms show up in a report.
A firm in the business of giving investment advice for a fee. Registration is with the SEC (for firms managing above a specific asset threshold) or with state securities regulators (for firms below that threshold). Either way, registration is a legal status, not a quality endorsement — it means the firm has filed the required public disclosures and submitted to the regulatory regime governing investment advisers in the United States. RIAs and the individuals working for them owe a fiduciary duty to their clients. Where you'll see this on a report: the firm type at the top of every report indicates RIA status, and the firm's CRD number links to its full Form ADV record on the SEC's IAPD database.
See also: Investment Adviser Representative (IAR), Fiduciary Standard, Form ADV Part 1A
An individual who gives investment advice on behalf of an RIA. The firm is registered; the person is also registered. The IAR is the human you actually interact with; the RIA is the legal entity behind the IAR. To become an IAR, an individual generally has to pass a qualifying exam (Series 65) and be registered in the state or states where they conduct business. Where you'll see this on a report: when you search for a specific person, their name appears at the top of the report and their employing RIA is identified below.
See also: Registered Investment Adviser (RIA), Dually Registered (IAR & BR)
A firm in the business of buying and selling securities — stocks, bonds, mutual funds, annuities — on behalf of clients. Broker-dealers earn money primarily on transactions: commissions when you buy or sell, distribution fees from product sponsors, and sometimes spreads on the securities themselves. They operate under Regulation Best Interest, a standard that requires recommendations to be in the customer's best interest at the moment a recommendation is made, but does not impose the ongoing fiduciary duty that applies to RIAs. Where you'll see this on a report: BD-only firms receive a 'BD' designation rather than a letter grade, with an explainer covering Reg BI and BD compensation structure.
See also: Registered Representative (BR / Broker), Regulation Best Interest (Reg BI), Dually Registered (IAR & BR)
An individual who works for a broker-dealer and is registered with FINRA to sell securities. To become 'registered representative', an individual generally has to pass a qualifying exams (Series 7 and Series 63 are most common) Often called a 'broker' or 'stockbroker' in everyday speech. Registered representatives are compensated primarily through commissions on transactions, sometimes supplemented by trail payments from mutual fund sponsors or insurance carriers. They operate under Regulation Best Interest — a recommendation-level standard, not an ongoing fiduciary duty. A registered representative who is ALSO an investment adviser representative is described as dually registered.
See also: Broker-Dealer (BD), Investment Adviser Representative (IAR), Dually Registered (IAR & BR), Regulation Best Interest (Reg BI)
Registered both as an investment adviser representative and as a broker-dealer representative. The standard that applies — Regulation Best Interest or fiduciary — depends on which capacity the person is acting in for a given recommendation. The same person can advise you under a fiduciary duty in the morning (acting as an IAR) and sell you a commissioned product under Reg BI in the afternoon (acting as a BR). Ask which capacity applies before acting on any specific advice. Where you'll see this on a report: dually-registered advisers carry both an IAR icon and a BR icon and registration rows in the Your Searched Adviser section.
See also: Investment Adviser Representative (IAR), Registered Representative (BR / Broker), Fiduciary Standard, Regulation Best Interest (Reg BI)
Central Registration Depository number — a unique identifier assigned by FINRA to every registered firm and every registered individual in the U.S. securities industry. A firm's CRD never changes, even if the firm renames itself or restructures. CRDs are the canonical way to look up an entity in regulatory databases (FINRA BrokerCheck, SEC IAPD). Firms have one CRD; individuals have one CRD; the same number can refer to either depending on context. Where you'll see this on a report: every report displays the firm's CRD prominently near the top.
See also: Form ADV Part 1A
A credential issued by the CFP Board of Standards. Requires bachelor's-level education, completion of a financial-planning curriculum, a comprehensive exam, three years of qualifying work experience, and ongoing continuing education. CFP professionals are bound by a fiduciary obligation while providing financial-planning services — a credential-level fiduciary duty that exists independently of whether the CFP also works at a fiduciary firm. As of year-end 2025, more than 107,000 individuals held CFP certification in the United States.
See also: Fiduciary Standard
A credential issued by the CFA Institute. Requires a bachelor's degree (or equivalent work experience), four years of qualifying professional experience, and passing three sequential six-hour exams. The CFA curriculum emphasizes investment analysis, portfolio management, and ethics. The credential is most common among institutional asset managers, research analysts, and investment-team members at advisory firms; it's less common among retail-facing financial planners.
A credential issued by The American College of Financial Services. Curriculum covers financial planning, insurance, retirement, taxation, and estate planning across eight courses. Often held by financial professionals whose practice mixes insurance and investment advice. The ChFC is similar in scope to the CFP but is administered by a different organization and does not carry the CFP's credential-level fiduciary obligation by default.
See also: Certified Financial Planner (CFP®)
A credential issued by the Investments & Wealth Institute. Focused on advanced investment consulting — manager research, portfolio construction, risk management — and typically held by professionals who work with high-net-worth individuals, institutions, or as portfolio consultants within larger firms. Requires a qualifying exam, executive education at an accredited business school, and ongoing continuing education.
See also: High-Net-Worth Individuals (HNW)
A credential issued by the Center for Fiduciary Studies. Curriculum focuses on fiduciary responsibility — the duties an adviser owes to clients, how to document fiduciary decision-making, and best practices for managing fiduciary risk. Most common among advisers serving retirement plans and ERISA fiduciaries, though the credential applies to fiduciary practice broadly.
See also: Fiduciary Standard
Individuals with at least $1 million in liquid financial assets — cash, stocks, bonds, and similar investments — excluding their primary residence. Some firms specialize in HNW clients exclusively; others serve a broader mix. The HNW threshold is a regulatory category used on Form ADV, not a measure of investment skill or fee tier. Where you'll see this on a report: the firm overview displays whether a firm has a HWN focus, a non-HNW ('Individuals') focus, or both.
See also: Form ADV Part 1A
An individual registered with FINRA as a representative of a broker-dealer who holds no active investment adviser representative registration. In this capacity the person sells financial products on commission and is held to Regulation Best Interest — they must act in your best interest at the moment of a recommendation — but no ongoing fiduciary duty applies, and there is no continuing obligation to monitor your account or revisit advice as your circumstances change. This matters most when you are expecting an ongoing advisory relationship but the person across the table is operating purely as a broker. Where you'll see this on a report: in the adviser breakdown at the top of a firm's report, where the count of representatives registered as broker-dealer only is shown separately from those also registered as investment advisers. You will also see this directly if you searched for a specific individual adviser. The top section detailing the individual will call out that they specifically are registered as a broker (registered representative).
See also: Registered Representative (BR / Broker), Regulation Best Interest (Reg BI), Dually Registered (IAR & BR), Fiduciary Standard
A plan. Advice about your overall financial life (goals, cash flow, retirement, emergency funds, tax, insurance, education, investment policy statement, household level asset allocation, estate considerations), usually as a written plan or ongoing guidance rather than day-to-day management of your investments. This is the service many people picture when they imagine seeking out financial advice. This service is distinct from portfolio management. A firm may offer it as a standalone service for a flat/fixed or hourly fee, or bundle it with Investment Management (see "Portfolio Management for Individuals") under an Assets Under Management (AUM) fee.
See also: Portfolio Management for Individuals, Fixed (Flat) Fee, Hourly Fee, Percentage of AUM Fee
This is the service at the heart of a typical ongoing advisory relationship, and often the one people end up with when they set out to get financial advice. It is the ongoing selection, monitoring, and trading of investments in your accounts — the hands-on running of your money, typically an annual percentage of AUM but often also includes commission based products. This is a separate service from financial planning: planning is advice about your whole financial life; portfolio management is running your investment accounts. The two answer different questions and can be priced differently. You must understand, and have clearly spelled out for you, which one you're actually buying.
See also: Financial Planning, Percentage of AUM Fee, Discretionary Authority, Assets Under Management (AUM)
Investment management for businesses/institutions rather than individuals; tells you the firm also serves business clients. A heavily business-focused firm may structure attention differently than one built around households. If you are a business owner, this may be the type of service you are looking for.
See also: Portfolio Management for Individuals
Managing pooled funds (hedge funds, private equity, private funds). When a firm advises individuals and runs its own pooled funds, there can be an incentive to place client assets into in-house funds carrying their own management and or performance fees. This is also found as a standalone service.
See also: Pooled Investment Vehicle / Private Fund, Performance Fee, Affiliation / Related Person
Managing registered funds (mutual funds, ETFs, closed-end funds). (Labeled "Institutional" on the report.) This is a firm that runs its own funds. If they also advise individuals or businesses there can be an incentive to recommend the funds they manage. This is often found as a standalone service.
See also: Pooled Investment Vehicle / Private Fund, Portfolio Management for Pooled Vehicles, Affiliation / Related Person
Advice to retirement plans (401(k), pension) and sometimes participants. Where a firm consults to a plan and also offers its own products, the conflict question is whether recommendations to the plan also happen to benefit the firm.
See also: Fiduciary Standard, Selection of Other Advisers
The firm picks/recommends other managers (third-party managers, model portfolios) rather than managing everything itself. Watch for: referral fees or revenue-sharing influencing which managers it recommends.
See also: Affiliation / Related Person, Percentage of AUM Fee, Fiduciary Standard
Moving in and out based on short-term market predictions rather than a steady long-term allocation; depends on repeatedly forecasting moves and involves more frequent trading.
See also: Discretionary Authority
Often genuinely informational, but a seminar can be a client-acquisition channel; where the firm or its reps earn commissions on products like annuities or insurance, a free or meal-included workshop can be the entry point to a sales process. The content isn't the conflict — what's worth knowing is what happens after.
See also: Commission
Generally informational, not a conflict source. (Impersonal, generally-circulated publications are also treated differently under securities law than personalized advice.)
How long you expect an investment — or an advisory relationship — to last. Time horizon does more work in evaluating advisory costs than almost any other single assumption, because costs come in two shapes: one-time costs (a front-end load, a flat planning fee) shrink as a percentage of the relationship the longer it runs, while ongoing costs (advisory fees, fund expense ratios, embedded trails) repeat every year and compound against your returns. A pricing structure that looks cheaper over three years can be the more expensive one over twenty. Horizon also interacts with compensation structure in a way worth noticing: when a firm is paid upfront, its revenue is complete at the point of sale regardless of how the relationship goes afterward; when a firm is paid ongoing fees, its revenue depends on retaining you — which aligns the firm with the relationship continuing, though not automatically with the relationship being worth continuing. Neither structure is improper; they simply place the firm's economic interest at different points in time, and knowing where it sits helps you interpret the recommendation. Where you'll see this: the Fee Calculator's Time Horizon control drives the cost comparison across all four scenario columns — extending the horizon amortizes one-time costs and compounds ongoing ones.
See also: Percentage of AUM Fee, Commission, Financial Planning
A legal obligation requiring an adviser to act in your best interest at all times, not just at the moment a recommendation is made. Fiduciary advisers must put your interests ahead of their own, disclose conflicts of interest, and avoid arrangements that benefit the firm at your expense. Investment advisers registered with the SEC or state regulators owe a fiduciary duty; broker-dealers do not (they operate under Regulation Best Interest, a related but narrower standard). Fiduciary advisers are typically compensated through fees you pay directly — a percentage of assets, hourly rates, or flat retainers — rather than commissions on products they sell to you. Where you'll see this on a report: the firm type at the top of every report indicates whether the firm is an RIA (fiduciary) or BD-only (Reg BI).
See also: Regulation Best Interest (Reg BI), Registered Investment Adviser (RIA), Dually Registered (IAR & BR)
A standard adopted by the SEC in 2019 governing how broker-dealers and their representatives make recommendations to retail customers. Reg BI requires brokers to act in the customer's best interest at the time a recommendation is made and to disclose material conflicts of interest. Unlike the fiduciary standard, Reg BI does not impose an ongoing duty to monitor client portfolios or to put client interests first at all times during the relationship. Brokers operating under Reg BI are typically compensated through commissions, a permitted form of compensation under the rule.
See also: Fiduciary Standard, Broker-Dealer (BD), Registered Representative (BR / Broker)
Authority granted by a client to the adviser to make trading decisions in the client's account without obtaining the client's permission for each individual trade. The adviser still owes a fiduciary duty (or Reg BI duty for brokers) when exercising discretion. The opposite is non-discretionary authority, where the adviser recommends trades but the client makes the final decision and authorizes each one. Most ongoing advisory relationships are discretionary because the operational burden of authorizing every trade is impractical at scale. Where you'll see this on a report: under 'Brokerage & Trading Practices.'
See also: Assets Under Management (AUM)
Holding — or having access to — client funds or securities. Most RIAs do not custody client assets directly; they place client assets with a separate qualified custodian (Charles Schwab, Fidelity, Pershing, etc.) and access the accounts through the custodian's platform. Direct custody by the adviser is permitted under SEC rules but triggers additional disclosure and audit requirements. Direct custody arrangements are not common unless you are dealing with a large national registered investment adviser. Where you'll see this on a report: the Custody section flags whether the firm or a related party has custody of client assets and identifies any qualified-custodian arrangements.
See also: Form ADV Part 1A
Registered investment advisers, RIAs, register with the SEC if they manage above a specific asset threshold (currently $110 million in regulatory assets under management) or qualify for SEC registration on other grounds. Smaller advisers register with state securities regulators in the state or states where they conduct business. The two regimes are similar in substance — both require Form ADV filings, both impose a fiduciary duty — but state-registered advisers are examined by state regulators rather than the SEC, and their public records live on the SEC's IAPD system alongside firms that fall under the SEC's examination authority.
See also: Registered Investment Adviser (RIA), Form ADV Part 1A
A compensation model in which the adviser is paid solely by its clients — hourly, flat/fixed fee, subscription, or a percentage of assets under management — and receives no commissions, trailing commissions, or compensation from third parties for product sales. AdviserReport applies a strict standard for this label: a firm is labeled Fee-Only only when its Form ADV Part 1A reports no commission compensation, no broker-dealer registration or affiliation, and no insurance capacity anywhere in its structure. If commission compensation can reach the client relationship through an affiliated channel, the firm is labeled fee-based instead. Where you'll see this on a report: the Revenue Model badge in the Compensation Structure section.
See also: Fee-Based, Commission, Percentage of AUM Fee
A compensation model that combines direct fees (hourly, flat/fixed, or AUM-based) with commissions, trailing commissions, 12b-1 fees, or other sales-related incentives — or that operates with affiliated broker-dealer or insurance channels through which commission compensation can be earned, even where the advisory firm itself charges only fees. Despite the similar name, fee-based is structurally different from fee-only: the client relationship can include commission compensation. This is the most common model by adviser compensation across the industry. Where you'll see this on a report: the Revenue Model badge in the Compensation Structure section.
See also: Fee-Only, Commission, Trailing Commissions, 12b–1 Fees
The total dollar value of client assets a firm manages or advises on. Firms file a single AUM number on Form ADV Part 1A covering all accounts they have either discretionary authority over (the firm makes trading decisions independently) or non-discretionary authority over (the firm recommends, the client decides). AUM is a firm-size signal — small boutique, mid-sized practice, national wealth manager — but not a quality signal. Larger firms aren't necessarily better than smaller ones; the conflict architecture and disclosure profile matter more. Where you'll see this on a report: the firm header carries the report render date which will incorporate the most recent AUM figures from prior database refresh.
See also: Discretionary Authority, Form ADV Part 1A
A fee you pay an investment adviser directly for managing your portfolio and/or providing advice, rather than a commission earned on products sold to you. Most commonly charged as a percentage of assets under management (AUM), but may also be a fixed (flat) fee, an hourly fee, or a subscription. Because the adviser is paid by you rather than by product sponsors, the advisory-fee model is the one associated with the fiduciary side of the business.
See also: Percentage of AUM Fee, Fixed (Flat) Fee, Hourly Fee, Commission
A fee charged as a percentage of the assets the firm manages for you, typically billed quarterly. Common rates run between 0.5% and 1.5% annually, with tiered breakpoints that lower the percentage as account size grows. The model creates an alignment: the firm makes more money as your portfolio grows, less when it shrinks. It also creates conflicts: an AUM-fee firm has an incentive to keep assets in-house and to encourage account rollovers. Where you'll see this on a report: the possible compensation methods checklist flags % AUM as one of the firm's disclosed methods; the compensation structure section also breaks it down further if the firm has % of assets under management as a compensation method flagged.
See also: Assets Under Management (AUM), Tiered Advisory Fees
Most advisory firms that charge a percentage of assets under management do not charge a single flat rate — they publish a tiered schedule in which the percentage declines as the account grows. A firm might charge one rate on the first $500,000, a lower rate on the next $500,000, and lower rates again at $1 million and beyond. The schedule appears in the firm's Form ADV Part 2A brochure, a narrative document — it is not part of the structured data the firm files in Part 1A, so two firms reporting identical compensation methods can have very different schedules. Two details are worth confirming with any firm: first, whether the schedule is blended (each tier's rate applies only to the dollars within that tier) or cliff (crossing a threshold re-prices the entire account — which means the rate on your next dollar can matter more than the headline rate); and second, that published schedules are frequently negotiable, particularly near tier boundaries. One structural note: because the firm's revenue rises with the assets it manages, tiered AUM pricing aligns the firm with your account's growth — but it also creates an incentive to bring more of your money under management, which is worth remembering when consolidation of outside accounts is recommended. Where you'll see this: the Fee Calculator's advisory-fee slider ranges shift as you adjust managed assets, reflecting the tier band that applies at that asset level.
See also: Percentage of AUM Fee, Assets Under Management (AUM)
A transaction-based fee paid each time you buy or sell a financial product. Commissions are the dominant compensation model on the broker-dealer side; they are permitted on the investment-adviser side but rare — and a firm that accepts them cannot be fee-only. Commissions create a different incentive structure than asset-based fees: more transactions produce more revenue, regardless of whether the transaction is in the client's interest. Reg BI requires recommendations to be in the customer's best interest at the moment of recommendation, but the underlying compensation conflict remains and must be disclosed.
See also: Regulation Best Interest (Reg BI), Registered Representative (BR / Broker)
A fee charged at a stated hourly rate for time spent on the client's matters. Common for project-based engagements (one-time financial plans, specific consultations) and for advisers who serve clients with episodic rather than ongoing advice needs. Hourly fees decouple compensation from asset size, which removes some of the conflicts inherent in AUM-based models but creates its own — an hourly adviser has a financial incentive to take longer on tasks.
A pre-agreed total fee for a defined scope of advisory work, regardless of how long it takes or how much the client's assets are worth. Common for standalone financial plans, periodic plan updates, and subscription-style ongoing engagements with a defined annual scope. Like hourly fees, fixed fees decouple compensation from asset size — useful for clients whose advice needs aren't proportional to their portfolio value (younger high earners with student debt, retirees living off principal, business owners with concentrated wealth).
See also: Subscription Fee
A recurring fixed fee — typically monthly or annual — for ongoing access to financial-planning advice. A relatively newer model adopted by some firms targeting younger clients or clients whose asset base doesn't yet justify a traditional AUM relationship. Conceptually similar to fixed fees but with a recurring billing cadence rather than per-engagement billing.
See also: Fixed (Flat) Fee
A fee tied to the investment performance of a client's account — for example, 20% of returns above a benchmark. Performance fees are permitted only with certain types of clients (generally those meeting specific net-worth or asset thresholds) and only under specific structural arrangements designed to prevent the adviser from taking outsized risk to chase performance. Most retail-facing advisers do not charge performance fees; they are most common in hedge funds and other private investment vehicles.
See also: Pooled Investment Vehicle / Private Fund
A single investment entity (a hedge fund, private equity fund, venture fund, real estate fund, or similar) that pools capital from multiple investors and is managed as a single portfolio. Firms that manage pooled vehicles file a separate schedule on Form ADV describing each fund. Pooled vehicles are typically restricted to accredited or qualified investors and are not generally accessible to retail clients with modest assets. Where you'll see this on a report: firms with pooled-vehicle exposure carry that signal in their conflict profile, since fund management creates incentives distinct from individual-account advisory work.
See also: Performance Fee
A program in which a single fee covers both investment advice and the trading costs (commissions, execution) that would otherwise be billed separately. Wrap fees simplify billing but create their own conflict: a firm earning a fixed wrap fee has an incentive to trade less, since trading volume doesn't change the fee but does change the firm's costs. Wrap fees typically run between 1% and 3% of assets per year. The wrapper also changes the fund layer: wrap programs commonly hold institutional (I-class) or clean share classes, which carry lower expense ratios than the retail share classes sold in other channels. The case for wrap pricing is that the cheaper funds inside the wrapper offset the higher all-in fee on the wrapper itself — whether that math works depends on the specific program and on how much trading actually occurs in your account. The SEC's Division of Examinations, reporting on its examinations of wrap fee programs in a 2021 Risk Alert, observed clients with low trading activity at several examined advisers paying higher total fees and costs than they would have incurred outside the wrap structure. Where you'll see this on a report: the report flags firms that sponsor or participate in wrap programs, and the Fee Calculator carries a dedicated Wrap Program scenario column.
See also: Percentage of AUM Fee, Expense Ratio (ER)
An arrangement in which an adviser directs client trades to a particular broker in exchange for research, data, or other services provided by that broker to the adviser. The cost of those services is paid indirectly out of the trading commissions clients pay — hence 'soft' (in-kind) rather than 'hard' (cash) dollars. Soft-dollar arrangements are permitted under SEC safe-harbor rules but represent a structural conflict: the adviser receives a benefit from the broker, paid for by client trading costs. Where you'll see this on a report: the report flags firms that receive soft-dollar benefits.
See also: Custody
The annual cost of owning a mutual fund or ETF, expressed as a percentage of the amount you have invested. A 0.75% expense ratio means $75 per year on every $10,000 in the fund. The fee is never billed to you directly — it is deducted from the fund's assets continuously, so you pay it through reduced returns and it never appears as a line item on a statement. The expense ratio bundles the fund's management fee, operating costs, and, where present, a 12b–1 distribution fee. That last component is why the expense ratio matters for conflict analysis: when a fund routes ongoing compensation back to the adviser or broker who sold it, that compensation travels inside the expense ratio. Two share classes of the same fund can differ by 0.25–0.30% in expense ratio, with the gap largely representing the trail paid to the seller. The expense ratio is a separate cost layer from any advisory fee — both apply at the same time. Where you'll see this: each scenario column on the Fee Calculator carries its own Fund Expense Ratio slider, because the funds typically chosen differ by sales channel.
See also: 12b–1 Fees, Trailing Commissions, Percentage of AUM Fee
A recurring mutual-fund expense that covers the fund's distribution and shareholder-servicing costs. A common industry criticism is that these fees function as "kickbacks." A portion is typically routed to the broker or adviser who sold the fund as an ongoing trailing commission, commonly 0.25% per year for as long as you hold the position. Because the fee is deducted from the fund's assets rather than billed to you directly, you pay it through reduced returns and rarely see it as a line item. The conflict it creates is one of product selection and retention: a fund paying a 12b–1 trail is more lucrative to the seller than an otherwise-identical fund that pays none, which can favor recommending and holding the higher-cost share class. Where you'll see this on a report: in the Compensation Structure section, where a fee-based firm's compensation can include 12b–1 trails alongside direct advisory fees.
See also: Trailing Commissions, Commission
An ongoing commission paid to an adviser or broker for as long as you continue to hold a recommended product — distinct from the upfront commission paid at the time of purchase. Trails are most common with mutual funds (where they are typically paid out of the fund's 12b–1 fee), variable annuities, and certain insurance products, and they are deducted from the product's ongoing expenses, so you pay them indirectly through reduced returns rather than as a separate bill. The structural conflict is the incentive to recommend products carrying higher ongoing trails and to keep them in your portfolio over time, since the revenue continues only while you hold the position. Where you'll see this on a report: in the Compensation Structure section, as part of a fee-based firm's compensation alongside direct fees and upfront commissions.
See also: 12b–1 Fees, Commission
A pooled investment that holds a portfolio of stocks, bonds, or other securities on behalf of many investors at once. A mutual fund is itself a company — a separate legal entity with its own board, its own management, and its own operating costs — and when you buy it you are buying shares of that company rather than the underlying securities directly. Mutual funds price once per day: orders entered any time during the day all transact at the same net asset value, calculated after the market closes, so you do not know the exact price at the moment you place the order. The fund charges for running itself through an expense ratio deducted continuously from fund assets, which is why owning a fund costs you something every year whether or not you work with an adviser. Where the conflict lives for an advisory client is rarely the fund concept itself — it is in which fund and which share class gets selected: the same fund is often sold in multiple share classes carrying different expense ratios and different embedded compensation to the seller, and the more expensive class is the more lucrative one to recommend. A fund that also pays a 12b–1 distribution fee routes part of its expense ratio back to the adviser or broker who placed you in it.
See also: Expense Ratio (ER), Advisory A-Share (Load-Waived), 12b–1 Fees
A pooled investment similar to a mutual fund — it holds a basket of securities and is itself a registered fund — but one that trades on an exchange like a stock. That structural difference drives most of what distinguishes an ETF for a consumer. Because ETF shares trade throughout the day, you buy and sell at a live market price rather than a single end-of-day value, and you can see the price before you transact. Because the great majority of ETFs are built to track an index rather than to have a manager pick securities, they tend to be passive, and passive management is cheaper to run than active stock selection — which is the main reason ETF expense ratios are generally lower than those of comparable actively managed mutual funds (broad-market ETFs commonly run a fraction of the cost). The index-tracking design also means lower turnover inside the fund, which tends to be more tax-efficient in a taxable account. Most ETFs do not carry sales loads or 12b–1 trails, so the embedded-compensation conflict that attaches to certain mutual fund share classes is usually absent — an ETF more often pays the seller nothing beyond whatever advisory fee you separately agree to. That is a structural observation, not a verdict: active mutual funds and ETFs each have legitimate uses, and “cheaper” is not the same as “better suited to you.”
See also: Expense Ratio (ER), Mutual Fund
A contract with an insurance company, rather than an investment in the ordinary sense — you give the insurer money, and in exchange the insurer makes a contractual promise, usually to pay income later or to provide some guarantee along the way. Annuities come in several forms that behave very differently: a fixed annuity pays a stated interest rate; a variable annuity puts your money into investment subaccounts whose value rises and falls with the markets; an indexed annuity ties returns to a market index through a formula with caps and participation rates that can be difficult to evaluate. Two features make annuities a recurring focus of consumer-protection attention. First, compensation: many annuities are sold for a commission, sometimes a large one paid upfront by the insurer, which creates a strong incentive to recommend the product and to recommend the version that pays the most — the commission is built into the contract’s economics, so you pay for it even though you rarely see it as a line item. Second, complexity and liquidity: annuities frequently carry surrender charges that penalize you for withdrawing money in the early years (often declining over a multi-year schedule), along with layered internal fees — mortality and expense charges, rider fees, subaccount expense ratios — that can be hard to total. The suitability question is genuinely hard precisely because annuities are not uniformly good or bad: the guarantees can have real value for the right person with the right goal, while the same contract can be an expensive, illiquid mismatch for someone who was steered into it by the commission rather than the fit. Where you’ll see this on a report: a firm whose advisers are insurance-licensed, or that is affiliated with an insurance company, has the capacity to earn commission compensation on products like annuities alongside any advisory fee.
See also: Commission, Fee-Based, Trailing Commissions
The primary regulatory filing for every investment adviser firm in the United States. Part 1A is a structured questionnaire covering the firm's basics (name, address, ownership), its business model (services offered, compensation methods, client mix), its affiliations (other registered businesses, related persons), and its disclosure history (regulatory actions, customer complaints, criminal events). Form ADV Part 1A is filed annually and amended whenever material facts change. It is public and is the primary data source for AdviserReport's Transparency Grade.
See also: Form ADV Part 1B, Form ADV Part 2A (Firm Brochure), Form ADV Part 2B (Brochure Supplement)
An additional Part 1 schedule required only of state-registered advisers (not SEC-registered firms). Part 1B captures information specific to state oversight — bond requirements, custody rules, supervisor identification — that the SEC does not require of its registrants. Because the schedule applies only to state-registered firms, it is excluded from cross-firm scoring at AdviserReport: comparing a state-registered firm's Part 1B answers against a SEC-registered firm that doesn't file Part 1B would produce an apples-to-oranges score.
See also: Form ADV Part 1A, SEC vs. State Registration
A plain-English narrative document describing the firm's services, fee schedules, conflicts of interest, disciplinary history, and operating practices. Often called the 'firm brochure.' Part 2A is intended to give prospective clients the disclosure they need to evaluate whether to hire the firm. Every advisory client must be offered the brochure before or at the start of the relationship. Firms can structure their fees, disclose conflicts, and describe their methodology however they choose within the framework of the form, so brochures vary widely in length, depth, and readability.
See also: Form ADV Part 1A, Form ADV Part 2B (Brochure Supplement)
A short companion document to Part 2A covering the specific individuals who will be providing advice to the client. Part 2B discloses the adviser's educational background, business experience, disciplinary history, other business activities, and any compensation arrangements that might create conflicts. Where Part 2A describes the firm, Part 2B describes the people.
See also: Form ADV Part 2A (Firm Brochure), Investment Adviser Representative (IAR)
A brief, plain-language summary required of both broker-dealers and investment advisers serving retail clients. Form CRS is intentionally short — two pages for an investment adviser, four for a dual-registrant — and covers the relationship type, fees, conflicts of interest, and disciplinary history at a glance. It is designed as a quick-reference companion to the longer Form ADV Part 2A. Firms must deliver Form CRS to retail clients at the start of the relationship and any time it changes. Most state registered investment advisers, firms that serve only institutional clients, and exempt reporting advisers (ERAs) are exempt from this requirement.
See also: Form ADV Part 2A (Firm Brochure)
The SEC's public-facing database of investment adviser records — both firms and individuals. IAPD displays Form ADV filings, registration history, employment history, exam history, and disclosure events. It is the canonical public source for adviser regulatory information. AdviserReport's data comes primarily from the IAPD database, supplemented by FINRA BrokerCheck for broker-dealer details.
See also: CRD Number, Form ADV Part 1A
Any person or entity that is under common control with the firm, or that has a material business relationship with the firm. Affiliations include subsidiary companies, parent companies, sister entities under shared ownership, and related individuals. Affiliations matter because they can create conflicts of interest — a firm that recommends a related broker-dealer or related insurance company is steering business to itself indirectly. Form ADV asks the firm to identify each category of related party. Where you'll see this on a report: the Affiliations section in the report lists each disclosed affiliation type and explains the conflict each one creates.
See also: Form ADV Part 1A
Any regulatory, criminal, civil, or customer-complaint event a firm or individual is required to disclose on their regulatory filings — criminal convictions, regulatory actions, civil court rulings, customer arbitration awards, and similar events. Not every disclosure is severe: the category includes events ranging from minor administrative infractions to serious fraud. Each disclosed event has a supplementary narrative — what happened, who was involved, when, and how it was resolved — which is the substantive detail behind the headline. The presence of any disclosure is a signal worth investigating, but the specifics matter: a single 25-year-old administrative late filing is materially different from a recent customer-restitution arbitration award. Where you'll see this on a report: the Disciplinary section displays each disclosed event with the year, type, and resolution where available.
See also: Affiliation / Related Person