ICWIM key terms

The UK regulator responsible for conduct supervision of financial firms and for protecting consumers and market integrity. It authorises firms and individuals, writes conduct rules and can fine or ban those who breach them.

The UK regulator, part of the Bank of England, that supervises the safety and soundness of banks, insurers and major investment firms. It focuses on financial stability and the harm a firm's failure could cause.

A UK framework that assigns named senior individuals explicit responsibilities and holds them personally accountable, while requiring firms to certify the fitness of other key staff each year.

A UK rule requiring firms to deliver good outcomes for retail customers across products, price and value, consumer understanding and support, raising the standard above mere disclosure.

A UK statutory fund that pays compensation to eligible customers when an authorised financial firm fails and cannot meet its claims, up to specified limits per person per firm.

The process of disguising the origin of money obtained from crime so it appears legitimate. Firms must identify customers, monitor transactions and report suspicious activity to the authorities.

A legal obligation to act solely in another party's best interests, putting the client's welfare ahead of the adviser's own. It demands loyalty, disclosure of conflicts and care in managing someone else's money.

Situations where an adviser's or firm's own interests, or those of another client, could improperly influence the advice or service given. Firms must identify, avoid or manage them and disclose them clearly.

The requirement that a recommendation matches a client's objectives, financial situation, knowledge, experience, risk tolerance and capacity for loss, supported by documented evidence of the assessment.

An internal arrangement that prevents confidential or price-sensitive information held in one part of a firm from reaching staff in another part, so conflicts and market abuse are avoided.

A unit of ownership in a company that typically carries voting rights and a claim on residual profits through dividends, ranking behind bondholders and preference shareholders if the company fails.

A bond issued by the UK government to borrow money, paying a fixed or index-linked coupon and repaying principal at maturity. Gilts are seen as low-credit-risk assets that set a benchmark for other sterling bonds.

A loan to a company, traded in the market, that pays interest and repays capital on a set date. Its price moves with interest rates and with perceptions of the issuer's creditworthiness.

A contract whose value is derived from an underlying asset, rate or index, such as a future, option or swap. Derivatives can hedge risk or speculate, and often use leverage.

A graph plotting the yields of similar bonds against their maturities at a point in time. Its shape signals expectations for interest rates and growth, and an inverted curve can warn of recession.

An opinion, issued by an agency such as Moody's or S&P, on a borrower's ability and willingness to repay debt. Ratings grade issuers from high investment grade down to speculative, default-prone levels.

A UK collective fund structured as a company whose share count expands and contracts as investors buy and sell, with units priced at net asset value plus specified dealing charges.

A UK listed company that invests in other companies' shares and assets. Its own shares trade on the stock exchange, so the price can differ from the underlying portfolio value, sometimes at a discount.

A fund whose shares are listed and traded throughout the day on an exchange, usually tracking an index. Many are cheap and transparent but can carry tracking differences and liquidity risks.

A European framework for retail collective investment funds that sets rules on diversification, liquidity, eligible assets and investor protection, allowing funds to be sold across member states.

A pooled fund, typically for wealthier or institutional investors, that uses flexible strategies such as short selling, leverage and derivatives and often charges performance fees. Liquidity is usually restricted.

A share's market price divided by its earnings per share, showing how much investors pay for each unit of profit. A high ratio implies expected growth or confidence; a low one may signal doubt.

The total annual return an investor would receive by holding a bond to maturity, assuming coupons are reinvested at the same rate. It links a bond's price, coupon and redemption value.

A measure of a bond's sensitivity to interest rate changes, expressed in years. A duration of five means the price falls roughly 5% for a one percentage point rise in yields.

A measure of how much an investment's returns tend to move when the market moves. A beta above one suggests greater volatility than the market; below one suggests less.

A risk-adjusted performance measure that divides excess return above the risk-free rate by the investment's volatility. Higher values indicate more return earned for each unit of risk taken.

The decision about how a portfolio's money is split between asset classes such as shares, bonds, property and cash. It is the main driver of long-term risk and return.

Spreading money across different assets, sectors and regions so that no single loss can seriously damage a portfolio. It works best when holdings do not move in the same direction at the same time.

The set of portfolios that offer the highest expected return for each level of risk, or the lowest risk for each expected return, plotted from combinations of risky assets.

The standard deviation of the difference between a portfolio's returns and those of its benchmark. Low tracking error indicates close index-hugging; high tracking error signals active deviation.

Periodically buying and selling holdings to bring a portfolio back to its target asset mix after market movements have shifted the weights. It restores the intended risk level.

A structured process of gathering information about a client's circumstances, goals, finances, attitudes and constraints before advice is given. It forms the evidence base for later recommendations.

Assessing how much investment risk a client is willing and able to accept, combining attitude to risk with capacity for loss, time horizon and financial resilience, usually through a questionnaire and discussion.

Modelling a client's income, spending, assets and liabilities over the whole of their life to test whether goals such as retirement are affordable and how much saving is needed.

A legal arrangement in which a person or company holds and manages assets for the benefit of others, on terms set out in a written deed. Trusts are widely used in estate planning.

A UK tax-advantaged account in which adults can hold cash, shares or funds, with interest, dividends and capital gains free of UK tax up to an annual subscription limit.

A tax on the profit made when selling or disposing of an asset for more than its acquisition cost, after allowances and reliefs. Rates and exemptions differ by asset type and residence.

A UK tax charged on the value of an estate transferred on death, and on some lifetime gifts, above the nil-rate band and any reliefs. Careful planning can reduce the liability.

The legal country a person regards as their permanent home, which can differ from nationality or residence and affects exposure to UK tax on worldwide income, gains and estates.