What are Retirement Assets? What’s a Fiduciary? Financial Terms Explained

Not all investors are financial geniuses. In fact, most aren’t. That’s why they look to hire the best financial advisor to care for and properly invest their life’s savings and plan for a comfortable retirement. But the process to find the best financial advisor can be intimidating. There is a lot of jargon out there, and most investors don’t know what it all means. There are many different types of financial services, and just as many terms to explain them (and often times, confuse the investors looking for these services). For example, what is a fiduciary? What are retirement assets? What’s the difference between a bear and bull market?

This confusion can happen whether you’re a new investor looking to hire a financial advisor for the first time or even a well-versed investor who needs to find a new advisor because they fell for a slick sales pitch the first time around.

Regardless, this happens a lot.

When mistakes do happen and investors hire the wrong professional, it can be expensive.

This is why Paladin Registry is driven to better educate investors so they make the right decision and hire the best financial advisor the first time. Paladin offers investors a wealth of educational material, such as eBooks and checklists, a complimentary credential check and even a free matching service that will provide you with the names of the top most qualified financial advisors per an investor’s specific criteria.

And now we also provide a Financial Dictionary.

This is one of our most recent tools and it has been used by many investors already.

When researching the best financial advisors, investors hear words like fiduciary, bear market and broker/dealer. But not everyone knows what these terms mean. Again, what are retirement assets?

Understanding is the first step to making good decisions.

Now you can simply visit the Paladin Dictionary and type a word into the search bar to get a simple, brief definition of a term an advisor may have used when talking with you. You can also browse by first letter to educate yourself ahead of time on some of the most popular searched words.

Our database includes more than 1,500 commonly used financial terms. Thousands of investors have told us they are confused by the investment jargon that is used by financial advisors. We also know that some financial terms are purposely used by advisors as sales ploys, because they too know that the terms confuse investors. This tactic allows a salesperson to establish themselves as an expert when they define a term you may not understand.

Top 10 Terms Being Searched

  1. Fiduciary: A person who occupies a position of financial trust with respect to the assets of another person, for example, a financial advisor. In the financial service industry, fiduciaries are held to higher ethical standards than non-fiduciaries. Fiduciaries also have greater accountability for the advice they give investors.

 

  1. Broker/Dealer: A broker/dealer is a firm that licenses stock brokers, registered representatives and other professionals who sell investment products for commissions. Broker/dealers also provide securities trading services and sell investment products. Broker/Dealers’ main source of revenue is commission from the sale of investment products and the processing of securities transactions.

 

  1. Annuity: Investments inside an insurance contract that provide fixed or variable payments. All earnings inside the annuity accrue tax-deferred until they are distributed. Most annuities are sold by representatives for commissions and have high expense ratios.

 

  1. Retirement Assets: Retirement assets include annuities, IRAs, 401ks and the taxable portion of survivor benefits from defined benefit plans, such as traditional employer pension plans.

 

  1. Registered Investment Advisor (RIA): Individuals and/or firms who provide investment advice and ongoing services for fees. RIAs who manage less than $100 million are registered with their state’s Securities Commissioner. RIAs who manage more than $100 million are registered with the Securities Exchange Commission (SEC).

 

  1. Registered Representative: A sales person at a broker/dealer who is licensed to provide transactional sales. Registered representatives also sell financial products such as mutual funds. Most registered representatives are paid with commissions.

 

  1. Independent: A high percentage of financial advisors are independent contractors and are not employees of the financial services firms that license them. They pay their own expenses and taxes and retain higher percentages of revenues that are generated from investor assets. Independent contractors usually have less pressure to sell particular products compared to advisors who are employees.

 

  1. IRA Rollover: Investors who retire or leave their companies can roll assets in company pension plans over into IRAs and not trigger a taxable event. Investors have 60 days to complete trustee-to-trustee transfers.

 

  1. Bear Market: A prolonged period of falling prices, usually six months or more. A bear market in stocks is usually brought on by the anticipation of declining economic activity, and a bear market in bonds is caused by rising interest rates.

 

  1. Bull Market: A period of six months or more in the market when general prices are rising.

Why Educate Yourself?

Knowledge is the best weapon in protecting yourself from financial disaster. We have had many investors share financial horror stories with us about an “advisor” telling them one thing but experiencing something else completely.

Your biggest concern should be potential conflicts of interest that blur the information you are being given. At Paladin, we believe the more you know about financial advisors, the higher the probability you will make the right choice when you select a professional to help you achieve your financial goals.

Choosing a financial advisor to work with is one of the most important decisions you will make. An advisor will determine if you can retire, when you can retire and how life in retirement will be. An advisor can also determine what you can leave behind, if anything, once you’re gone.

Visit Paladin Registry to start your search and get educated. All of Paladin’s services are free. We have nothing to sell you.

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