Korea Certified Private Banker key terms

Under the Capital Markets Act, financial investment products are sorted into securities, derivatives, and collective investment schemes based on whether principal is guaranteed and how contractual rights are structured.

Before recommending a product, a firm must assess whether it fits the client's investment purpose, risk tolerance, and experience; for unsolicited orders it must at least confirm basic appropriateness.

A written record in which the client states investment purpose, asset situation, risk appetite, and experience; it is the evidentiary base for suitability judgments and must be refreshed periodically.

Firms must give clients a prospectus before they subscribe to securities or funds, and obtain a signed confirmation, so that investment decisions rest on disclosed information.

Policies and controls that identify situations where the firm's or an employee's interest may harm a client, and that separate, disclose, or decline those situations.

The registration requirements and conduct standards a private banker must meet, covering client-first duty, confidentiality, prohibition of self-dealing, and reporting of misconduct.

The process of dividing a portfolio among asset classes such as cash, bonds, equities, and alternatives, driven by the client's goals, horizon, and risk capacity rather than by market forecasts alone.

A structured assessment of a client's willingness and ability to bear loss, combining questionnaire responses with financial capacity, time horizon, and behavioral biases.

Restoring target weights after market moves or life changes, either on a calendar schedule or at threshold bands, to keep the portfolio aligned with the agreed policy.

A written document setting the client's objectives, constraints, target allocation, and review rules, giving both parties a benchmark for later decisions and disputes.

Predictable thinking errors such as loss aversion, anchoring, and overconfidence that lead clients to sell winners early or hold losers too long; advisors must recognize and counter them.

A measure of a bond's price sensitivity to interest-rate changes, expressed in years; longer duration means larger price moves when yields shift.

An agency's assessment of an issuer's ability to meet debt obligations; downgrades can cut prices and force sales from portfolios with rating mandates.

Share price divided by earnings per share; it shows how much investors pay per unit of profit and is useful only when compared with peers and the company's own history.

Share price divided by book value per share; it is most meaningful for banks and asset-heavy firms, where book value is a stable reference point.

Excess return over the risk-free rate divided by the standard deviation of returns; it compares portfolios on return earned per unit of total volatility.

The largest peak-to-trough decline in portfolio value over a period, expressed as a percentage; clients feel this number more than volatility statistics.

A short-term instrument sold by a securities firm that has been licensed to issue notes, carrying the firm's credit risk rather than deposit insurance.

A progressive tax on a resident's combined income from interest, dividends, business, employment, pensions, and other sources, filed annually with deductions and credits applied.

When a resident's interest and dividend income exceeds the annual threshold, the excess is combined with other income and taxed at progressive rates instead of the flat withholding rate.

The payer of interest, dividends, or wages deducts tax before payment and remits it to the tax office, settling the taxpayer's liability except where aggregation applies.

Tax on gains from transferring specified assets such as real estate and certain securities, calculated on the difference between transfer price and acquisition cost after deductions.

Tax imposed on a person who receives property from another without consideration; rates rise with cumulative gifts over a rolling period, and the donor normally files the return.

A per-recipient allowance that removes a set amount of gifts from gift tax, with different limits for spouses, adult children, minors, and other relatives.

A local tax paid when acquiring real estate, with rates that vary by property type, acquisition channel, and whether the buyer already owns other homes.

An annual national tax on the value of land and housing held above a threshold, calculated on aggregated ownership and added to the ordinary property tax.

A government-published value for land and housing used as the base for property taxes and many administrative calculations, usually below actual market price.

Urban renewal schemes that demolish and rebuild aging housing; investors weigh project stage, contribution shares, and regulatory risk, since returns arrive late and unevenly.

Listed or unlisted vehicles that pool investor money to own income-producing property and must distribute most taxable income as dividends, giving liquid real estate exposure.

Assets outside public stocks and bonds, such as private equity, infrastructure, hedge funds, and real assets, offering diversification but with illiquidity and valuation uncertainty.

Korea's public earnings-related pension, financed by employee and employer contributions, paying benefits based on lifetime average income and contribution years.

A retirement account that receives severance pay or voluntary contributions, with tax deferral until withdrawal and limits on how much may be held in riskier assets.

A tax-advantaged savings product for retirement where contributions earn a tax credit and returns are taxed only when withdrawn as a pension.

Tax levied on the estate or heirs when property passes at death, computed on the total estate after deductions and credits, with rates rising by estate size.

A document directing how a person's property is distributed at death; Korean law recognizes several strict forms, and defects can invalidate the whole instrument.

A minimum share of the estate that certain heirs, such as spouse and children, may claim even against a will, protecting them from total disinheritance.

An arrangement where a settlor transfers property to a trustee who manages it for beneficiaries; used for asset protection, succession, and charitable purposes.

The ethical rule that a private banker must place the client's interest above the firm's sales targets and personal gain, disclosing any conflict that cannot be avoided.

Rules limiting collection, use, and third-party sharing of client personal and financial data, requiring consent, secure storage, and prompt breach notification.

Customer due diligence, beneficial-ownership identification, and suspicious-transaction reporting duties that private bankers apply to detect and block illicit funds.

The duty to tell clients, in writing and before transactions, what commissions, trailers, and indirect benefits the firm or banker will receive from a product.