FSCP key terms

A structured sequence of steps a planner follows with a client: establishing the relationship, gathering data, analyzing the situation, developing recommendations, implementing them, and monitoring progress over time.

The legal and ethical obligation to act in the client's best interest, placing the client's interests ahead of the planner's own and disclosing conflicts of interest that could bias advice.

A regulatory threshold requiring that a recommendation be reasonably appropriate for the client's objectives, financial situation, and risk tolerance, which is a lower bar than acting in the client's best interest.

The requirement to collect and document essential facts about a client, including goals, finances, tax status, time horizon, and risk tolerance, before making any recommendation or opening an account.

A client's emotional and financial capacity to accept investment losses or volatility in pursuit of goals, shaped by income stability, time horizon, experience, and personality.

The objective ability of a client's finances to absorb a loss without derailing goals, distinct from willingness to take risk, and driven by assets, income, and liquidity needs.

The length of time an investor expects to hold assets before the money is needed, which strongly influences how much volatility an allocation can reasonably absorb.

Dividing a portfolio among asset classes such as equities, fixed income, and cash to balance expected return against volatility in line with the client's goals and risk profile.

Spreading investments across assets, sectors, and issuers so that any single loss affects only part of the portfolio, reducing unsystematic risk without necessarily lowering expected return.

Earning returns on previously earned returns, so that growth accelerates over time; the effect grows sharply with longer time horizons and higher reinvestment rates.

The current worth of a future sum or stream of payments, calculated by discounting at an assumed rate of return, used to size savings goals and compare alternatives.

The value of the best alternative forgone when a choice is made, such as the growth lost by holding cash instead of investing it toward a long-term goal.

The danger that rising prices erode the purchasing power of savings and fixed income, leaving a client short of a goal even when nominal returns are positive.

Readily accessible cash reserves, commonly three to six months of essential expenses, held to cover job loss, medical bills, or repairs without disrupting long-term investments.

A personal financial statement listing income sources and expenses over a period, revealing surplus or deficit available for saving, debt reduction, and goal funding.

A snapshot listing assets at current value minus liabilities owed, showing a client's financial position at a point in time and progress toward long-term goals.

A written, integrated set of recommendations covering insurance, investments, taxes, retirement, and estate matters, with assumptions, costs, and review dates the client can act on.

The structured conversation and fact-finding stage in which a planner learns a client's goals, values, obligations, and financial details before any analysis or recommendation is offered.

Concentrating fully on a client's words and meaning, reflecting back what was heard, and asking clarifying questions so the planner understands real goals rather than assumed ones.

A question that cannot be answered with yes or no and invites the client to describe priorities, concerns, and circumstances in their own words, surfacing information a checklist would miss.

An approach that first identifies a client's specific problem or gap, then presents a solution matched to it, rather than leading with a product and seeking a justification.

Comparing a client's projected resources against the amount needed for a goal, such as retirement income or college costs, to quantify the shortfall a recommendation must address.

A person or channel that introduces new prospects, such as satisfied clients, centers of influence, or professional networks, and that works best when the referral is specific and pre-qualified.

A professional such as an attorney, accountant, or real estate agent who regularly serves clients with needs overlapping the planner's and can refer them through a reciprocal relationship.

A written schedule setting target markets, outreach activities, weekly contact volumes, and measurement metrics so that lead generation happens consistently rather than only when business slows.

A defined group of prospects sharing occupation, life stage, income, or needs, allowing the planner to tailor messaging, build expertise, and earn referrals more efficiently.

A concise statement of the specific outcome a planner delivers and for whom, distinguishing the practice from competitors and giving prospects a reason to take a meeting.

A brief spoken summary of who the planner helps, what problem is solved, and what step comes next, short enough to deliver naturally in an unexpected conversation.

Tracking prospects through defined stages from first contact to engaged client, with follow-up dates and conversion rates, so no opportunity is lost through neglect.

Deliberately building mutually useful relationships through organizations, events, and community involvement, where visibility and trust generate introductions over time rather than immediate sales.

The firm's required approval and supervision of marketing materials, client communications, and recommendations to confirm they meet securities rules and internal policies before use.

Regulatory constraints on how investment advisers and representatives may promote services, including limits on testimonials, performance claims, and misleading statements in marketing.

Required policies for identifying customers, verifying identity, monitoring transactions, and reporting suspicious activity, which every firm must maintain and train staff on.

A confidential filing made to the financial intelligence unit when transactions suggest money laundering, fraud, or other illegal activity; the client must not be told about the filing.

A tax-advantaged account available with a qualifying high-deductible health plan, funded with pre-tax dollars, growing tax-deferred, and withdrawn tax-free for qualified medical expenses.

A health insurance policy with a deductible and out-of-pocket limit above statutory thresholds, which is the eligibility gateway for contributing to a health savings account.

An employer-funded account that reimburses employees for qualified medical expenses; it is owned by the employer, cannot be funded by salary deferral, and is not portable.

Rules determining which of two or more health plans pays first when a person is covered by more than one policy, preventing duplicate payment for the same medical expense.

The federal health insurance program for people aged 65 and older and certain younger people with disabilities, composed of Parts A, B, C, and D with distinct enrollment rules.

Coverage that pays for assistance with daily living activities such as bathing and dressing when a policyholder becomes chronically ill, typically after an elimination period.