CFP Hong Kong key terms

A snapshot listing a person's assets at current market value minus all liabilities, producing the figure used to measure progress toward financial goals and to test solvency before new commitments.

A record of income received and expenses paid over a period, used to show surplus or deficit, identify spending patterns, and fund savings, insurance premiums, and investment contributions.

Liquid money set aside to cover living costs during job loss, illness, or unexpected repair, typically three to six months of essential expenses held in accessible low-risk accounts.

Total monthly debt repayments divided by gross monthly income, used by lenders and planners to judge whether a household can absorb additional borrowing without strain.

The legal requirement that a policyholder would suffer genuine financial loss from the insured event, which must exist at inception for a valid life insurance contract in Hong Kong.

The insurer's assessment of health, occupation, lifestyle, and financial information to classify risk and decide whether to accept a proposal, apply loadings or exclusions, or decline cover.

Failure to reveal material facts when applying for insurance, which can entitle the insurer to avoid the contract or reduce a claim, subject to Hong Kong's statutory rules on misrepresentation.

A cooling-off window, generally 21 days after delivery of a Hong Kong life policy, during which the policyholder may cancel and receive a refund of premiums less any market loss.

Borrowing from a bank to pay large single premiums on a life policy, where the policy is assigned as collateral and returns must exceed loan interest for the arrangement to work.

A flexible whole-of-life contract with separately shown mortality charges and account value, where the cost of insurance is deducted monthly and poor crediting rates can erode cash value.

The assumed crediting or investment return used in a benefit projection; Hong Kong rules cap illustrative rates and require disclosure that illustrated values are not guaranteed.

Dividing a portfolio among asset classes such as equities, bonds, and cash to balance expected return against volatility in line with the investor's goals, horizon, and capacity for loss.

The degree of price fluctuation and possible loss an investor can accept emotionally and financially, assessed through capacity (resources, horizon) and attitude (willingness) before recommending products.

The principle that higher expected returns require accepting greater uncertainty of outcome, so any product promising above-market yield should be examined for hidden credit, liquidity, or leverage risk.

A framework showing that combining assets whose returns do not move together can reduce portfolio volatility for a given expected return, making correlation central to diversification decisions.

A number between minus one and plus one describing how closely two assets' returns move together; lower or negative values give greater diversification benefit when combined in a portfolio.

A measure of a bond's price sensitivity to interest rate changes, expressed in years; a duration of five implies roughly a five percent price fall for a one percent rate rise.

The total annualised return an investor earns by holding a bond to redemption, capturing coupon income plus gain or loss from buying below or above par value.

An agency's opinion on an issuer's ability to meet obligations, graded from investment grade to speculative, which drives the yield premium demanded by bond investors.

A fund whose units trade on an exchange like shares, tracking an index or basket while charging lower fees than most actively managed funds and disclosing holdings regularly.

The standard deviation of the gap between a fund's return and its benchmark's return, revealing how closely an index product actually replicates the exposure it promises.

Under Hong Kong securities rules, a person with a portfolio of at least HK$8 million or total assets of HK$40 million, who may access products with reduced offering restrictions.

A client category under Hong Kong law including institutions and high-asset individuals, to whom certain solicitation, suitability, and disclosure protections do not apply in the same way.

The process of matching a recommended product to a client's stated objectives, horizon, risk profile, and knowledge, documented so the advice can be defended after a dispute.

Hong Kong's compulsory retirement scheme requiring employer and employee contributions on relevant income, with accrued benefits vested and preserved until retirement or permitted early withdrawal.

The monthly pay used to calculate Mandatory Provident Fund contributions, subject to statutory minimum and maximum levels that cap the amount of mandatory saving each month.

Additional money paid into a Mandatory Provident Fund scheme beyond the statutory requirement, either as tax-deductible voluntary contributions or as flexible extra savings.

A retirement plan promising a benefit based on salary and years of service, with investment and longevity risk borne by the sponsor rather than the member.

A retirement plan where the member's ultimate benefit depends on contributions paid plus investment returns, so the member carries both market risk and longevity risk.

A contract converting a lump sum into regular lifetime income, transferring longevity risk to the insurer; Hong Kong's public annuity scheme offers immediate payouts with guaranteed and non-guaranteed portions.

The percentage of a retirement portfolio drawn each year to fund spending; sustained high rates deplete capital faster and increase the risk of running out of money.

The danger that rising prices erode purchasing power, which matters most for long retirements and for fixed-income assets that cannot adjust payouts upward over time.

Hong Kong's basis of taxation, under which profits, salaries, and property income are taxed only if arising in or derived from Hong Kong, regardless of the taxpayer's residence.

Hong Kong tax on employment income, charged at progressive rates on net chargeable income or at the standard rate on net total income, whichever produces the lower liability.

A statutory deduction from assessable income granted to every taxpayer, with higher amounts for married persons, dependent children, and dependent parents, reducing the tax base.

A capped allowance for qualifying outlays such as approved retirement contributions, home loan interest, or voluntary health insurance premiums, which lowers net chargeable income.

Measures preventing the same income being taxed twice, delivered through Hong Kong's comprehensive avoidance agreements or unilateral tax credits for foreign tax already paid.

A legal concept describing the jurisdiction a person regards as permanent home, distinct from residence and nationality, and often decisive for succession and tax treatment.

A will directs how assets pass on death, while probate is the court's confirmation of the executor's authority; without a valid will, statutory intestacy rules decide distribution.

A legal arrangement where a settlor transfers assets to trustees who hold them for beneficiaries, allowing control over distribution, continuity, and privacy beyond what a will achieves.

The policyholder's instruction naming who receives life insurance proceeds, which can allow faster payment outside the estate and reduce exposure to estate disputes.

The obligation to act in the client's best interest, place client interests above personal gain, avoid or disclose conflicts, and provide advice that a reasonable professional would give.

Situations where an adviser's commission, ownership, or relationship could bias recommendations; Hong Kong rules require disclosure and management so client interest prevails.

The due-diligence process collecting identity, financial situation, objectives, and risk profile before advice is given, forming the factual basis for suitability and anti-money-laundering checks.

Mandatory ongoing training hours that licensed and registered practitioners must complete to maintain competence, covering technical knowledge, ethics, and regulatory updates.