Financial Glossary
Key terms explained in plain English, no jargon, no complexity. We appreciate our industry uses a lot of financial ‘jargon’, which can make it difficult to decipher information and correspondence. In order to try to assist with this, we have created a glossary of many of the terms you may come across. If you would like further clarification on any of the definitions, or cannot find a particular term, we would be happy to assist further.
Active Management
The traditional investment approach where fund managers actively build and change a portfolio of assets (e.g. stocks and shares) in order to take advantage of what they believe are the best opportunities.
Asset Allocation
The process of dividing investments across different asset classes, such as equities, bonds, property and cash to balance risk and expected return in line with an investor's objectives
Annual Allowance
The maximum amount you can contribute to a pension each tax year whilst still receiving tax relief. You may be able to “carry forward” unused allowance from the last three tax years to increase your limit for the current year. Your annual allowance includes all the payments made into your pension by you, your employer, or any third party. It also includes most increases in benefits if you are an active member of a defined benefit scheme (also called final salary, or career average scheme).
Asset Classes
The different types of assets available to investors. For example, equities, cash, fixed interest or property.
Annuity
An annuity guarantees to provide you with a regular income for the rest of your life, in return for you paying over a lump sum from your pension fund.
AIM (Alternative Investment Market)
A sub-market of the London Stock Exchange designed for smaller, growing companies. AIM shares carry higher risk but can offer certain Inheritance Tax planning advantages after a qualifying holding period.