CFP Singapore key terms

The ongoing process of setting personal financial goals, gathering and analysing data, developing and implementing a written plan, then monitoring and revising it as circumstances change.

A written document summarising a client's goals, current position, recommended strategies and assumptions; it should state scope, responsibilities and review frequency so both parties know what is covered.

The initial stage where scope, services, fees and responsibilities are agreed and documented before advice is given, ensuring expectations and any limitations of the engagement are clear to the client.

A structured record of a client's personal details, dependants, income, assets, liabilities, insurance, goals, attitudes to risk and time horizons, forming the factual basis for all later analysis and recommendations.

The obligation to collect and verify enough information about a client's financial situation, objectives and risk appetite to give suitable advice, and to keep that information current through reviews.

The degree of investment volatility and potential loss a client is emotionally and financially able to accept, distinguishing willingness to take risk from capacity to bear it.

The financial ability of a client to absorb losses without jeopardising essential goals, driven by income stability, time horizon, liquidity needs and the size of the asset base relative to objectives.

The period over which money is invested before it is needed, which shapes how much short-term volatility a portfolio can absorb and how much exposure to growth assets is appropriate.

The requirement that a recommendation fits a client's objectives, financial situation and needs, and that the adviser can justify why the advice is appropriate rather than merely available.

A disclosure document given to a client setting out the advice, its basis, the costs and remuneration involved, and any conflicts of interest, so the client can make an informed decision.

Situations where an adviser's own interests, such as commissions or product incentives, could bias the advice given; these must be identified, avoided where possible, and disclosed to the client.

A legal obligation to act in the client's best interests ahead of one's own, requiring loyalty, care, full disclosure of material information and avoidance of undisclosed personal gain from the relationship.

Rules governing the collection, use, disclosure and retention of client personal information, requiring consent, reasonable security safeguards and limits on use beyond the stated purpose.

Controls requiring financial professionals to identify clients, verify identity using reliable documents, monitor transactions and report suspicious activity, helping prevent proceeds of crime entering the system.

A summary of money received and spent over a period, separating income sources from fixed and discretionary outgoings, used to identify surplus funds or shortfalls available for saving and investment.

A snapshot listing assets at current value less liabilities owed, showing financial position at a point in time and providing a baseline against which progress towards goals can be measured.

Liquid savings set aside to cover unexpected expenses or income interruption, typically several months of essential outgoings, held in readily accessible accounts rather than long-term investments.

Growth earned on both the original principal and previously accumulated interest, so returns build on returns; small differences in rate or time produce large differences in final value.

The worth today of a future sum or stream of payments after discounting at an assumed rate, used to compare alternatives and to judge whether a future goal amount is realistically fundable.

The principle that a sum available now is worth more than the same sum later because it can be invested and earn returns, underpinning all discounting and accumulation calculations in planning.

The general rise in prices over time that reduces purchasing power, meaning a plan must target real rather than nominal returns to preserve the client's future standard of living.

The return on an investment after removing the effect of inflation, approximating the nominal return minus the inflation rate; it measures actual growth in purchasing power over the period.

Dividing a portfolio among asset classes such as cash, bonds, property and equities, and choosing the proportions, which is the primary driver of a portfolio's return variability over time.

Spreading money across assets, sectors and markets whose returns do not move together, reducing the impact of any single holding's poor performance without necessarily lowering expected return.

A measure from minus one to plus one of how closely two assets' returns move together; low or negative correlation between holdings is what makes diversification reduce overall portfolio volatility.

A statistical measure of how widely returns vary around their average, commonly used as a proxy for investment volatility and total risk; higher values indicate a wider spread of outcomes.

A measure of how much an asset's price tends to move relative to the overall market; a value above one suggests greater sensitivity to market swings, below one suggests less.

Market-wide risk from factors such as interest rates, recessions or political events that affects most securities and cannot be removed by holding more positions; only hedging or asset allocation can moderate it.

How quickly an asset can be converted to cash at or near its fair value; illiquid assets such as property may take months to sell or may need a price discount to attract a buyer.

A measure of a bond's price sensitivity to interest rate changes, expressed in years; longer duration means larger price falls when yields rise, which matters when matching bonds to spending needs.

The total annualised return an investor receives by holding a bond to maturity, assuming all coupons are reinvested at that same rate and the issuer pays as promised.

The chance that a bond or loan issuer fails to pay interest or principal on time, assessed through credit ratings and issuer financial strength; higher perceived risk usually demands a higher yield.

The risk that changing market interest rates reduce the value of existing fixed-income holdings or alter the cost of borrowing, with longer-maturity instruments generally more exposed.

A pooled fund in which many investors' money is combined and managed by a professional according to stated objectives, offering diversification and access that individual investors could not achieve alone.

The regulated offering document for a fund or security describing objectives, strategy, risks, fees, and the rights and obligations of investors, which should be read before subscribing.

The annual cost of running a fund expressed as a percentage of its assets, covering management and administrative charges; it reduces net returns and compounds against the investor over long periods.

The amount a policyholder pays, monthly, annually or as a single sum, in exchange for cover; it reflects the insurer's assessment of risk, expenses, and the benefits promised under the contract.

The amount the insurer contractually pays on a claim event such as death or diagnosis of a covered illness, before adjustments for bonuses, loans or policy terms.

The insurer's process of assessing an applicant's health, occupation and lifestyle to decide whether to accept the risk, and on what terms, including exclusions or premium loadings.

A specific event, condition or circumstance listed in a policy for which no benefit is payable, such as certain pre-existing illnesses or hazardous activities, limiting the cover otherwise promised.

The amount a policyholder must pay towards a loss before the insurer contributes, common in health and property cover; a higher deductible usually lowers the premium payable.

A cost-sharing arrangement where the insured bears a fixed percentage of each covered claim and the insurer pays the rest, so the policyholder retains part of every loss.

Cover that pays a death benefit only if the insured dies within a specified period, with no cash value; it provides large protection for a relatively low premium during earning years.

Permanent cover lasting for the insured's lifetime, combining a death benefit with accumulating cash value, typically at a higher premium than term insurance for the same sum assured.

The savings component that builds inside a permanent life policy, which the owner may borrow against or receive on surrender, subject to policy terms and surrender charges.

The amount a policyholder receives if they end a life policy early and cash it in, often less than premiums paid in the early years because of upfront costs and charges.

Insurance paying a lump sum when the insured is diagnosed with a specified condition meeting the policy definition, providing funds for treatment, recovery and living costs during time off work.

Cover replacing part of earned income when illness or injury prevents work, usually paying a monthly benefit after a waiting period and continuing for a defined benefit period.

A contract, usually with an insurer, that converts accumulated savings into a regular income, either for a fixed number of years or for life, helping manage the risk of outliving one's money.

Estimating the income needed in retirement, projecting sources such as savings and pension benefits, and deciding contribution and drawdown strategies to close any projected shortfall.

Arranging how assets are held, transferred and distributed on death or incapacity, using wills, nominations, trusts and insurance so beneficiaries receive intended amounts with minimal delay and cost.

A legal arrangement where a trustee holds and manages assets for the benefit of named beneficiaries according to the trust deed, separating legal ownership from beneficial enjoyment.

A instruction to a scheme or insurer directing who should receive benefits on the member's death, which may be binding or non-binding depending on the scheme rules and applicable law.