RFP Philippines key terms

The structured six-step method planners follow: establish the client relationship, gather data and goals, analyze the situation, develop recommendations, implement them, and monitor progress over time.

A legal obligation to act solely in the client's best interest, placing the client's welfare above the planner's own compensation, affiliations, or convenience when giving advice.

A lower threshold than fiduciary duty requiring that a recommendation be reasonably appropriate for the client's objectives, financial situation, and risk tolerance at the time it is made.

A written agreement defining the scope of services, fees, responsibilities of both parties, and limitations of the engagement, signed before substantive planning work begins.

The practice of telling clients in writing about commissions, referral fees, product affiliations, or other arrangements that could bias a planner's recommendations, so the client can judge objectivity.

A structured evaluation of a client's willingness and financial capacity to accept investment losses, combining psychological attitude with objective factors such as income stability and time horizon.

The objective ability of a client's finances to absorb losses without jeopardizing essential goals, driven by income stability, liquidity needs, and time horizon rather than by feelings.

The division of a portfolio among asset classes such as equities, bonds, and cash, which is the primary driver of long-term return and volatility for a diversified investor.

Spreading investments across assets, sectors, and geographies so that poor performance in any single holding has a limited effect on the total portfolio's value.

A statistical measure from -1 to +1 of how closely two investments move together; low or negative correlation between holdings improves the risk reduction gained from diversification.

A measure of how widely an investment's returns vary around their average, commonly used as a proxy for volatility and total risk in portfolio analysis.

A measure of a security's sensitivity to movements in the broad market; a beta above one implies greater volatility than the market, below one implies less.

The period over which money is invested before it is needed; longer horizons generally permit more equity exposure because there is more time to recover from downturns.

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

A personal financial statement listing all sources of income and all outflows over a period, revealing whether the household runs a surplus or deficit and where spending can be adjusted.

A snapshot listing the value of all assets minus all liabilities at a point in time, used to measure financial progress and to assess overall financial health.

The share of gross monthly income consumed by scheduled loan payments; lenders use it to judge borrowing capacity and planners use it to flag over-indebtedness.

The gradual repayment of a loan through scheduled installments in which each payment covers accrued interest first and applies the remainder to reducing principal.

The process by which earned interest is added to principal so that future interest is calculated on a growing base, producing exponential growth over long periods.

The principle that a peso received today is worth more than the same peso received later, because today's money can be invested and earn a return in the meantime.

The current worth of a future sum or stream of payments after discounting at an assumed rate of return, used to compare goals and obligations on a common basis.

The sustained rise in the general price level that erodes purchasing power over time, requiring planners to use real rather than nominal returns in long-range projections.

The return on an investment after subtracting inflation, showing the actual increase in purchasing power; approximately the nominal return minus the inflation rate.

A contract in which the insurer pays a stated benefit to named beneficiaries on the death of the insured, used to replace income and cover obligations survivors would otherwise face.

A method of sizing life insurance coverage by calculating the present value of the insured's future earnings that dependents would lose upon premature death.

A coverage calculation that adds up specific obligations such as debts, education costs, and income replacement, then subtracts existing resources to find the insurance shortfall.

A managed-care arrangement in which members receive care through a defined network of providers for a fixed prepaid fee, usually with lower costs but less provider choice.

The percentage split of covered medical costs shared between insurer and insured after any deductible is met, for example an 80/20 arrangement with an out-of-pocket cap.

The amount an insured must pay out of pocket before an insurance policy begins to pay covered claims, trading lower premiums for higher retained risk.

A deliberate decision to bear a loss exposure oneself rather than transfer it to an insurer, appropriate when losses are small, frequent, or cheaper to absorb than to insure.

Shifting the financial consequence of a loss exposure to another party, most commonly by purchasing an insurance policy in exchange for premium payments.

A retirement plan promising a specified benefit at retirement, usually based on salary and years of service, with the employer bearing investment risk and funding obligation.

A retirement plan in which the employer contributes a set amount to an individual account and the employee bears investment risk, receiving whatever the account accumulates by retirement.

The schedule by which an employee gains non-forfeitable ownership of employer contributions to a retirement or benefit plan, often after a stated period of service.

An estimate of the retirement income a client will receive from pensions, savings, and government benefits, compared against projected living expenses to identify a funding gap.

The process of arranging assets and legal documents so that wealth is transferred to intended heirs with minimal tax, cost, and delay, according to the client's wishes.

A legal document directing how a person's property is distributed on death and naming guardians for minor children; it requires probate and can be revised during life.

A legal arrangement in which a trustee holds and manages assets for the benefit of named beneficiaries, potentially avoiding probate and allowing controlled, conditional distributions.

A tax levied on the transfer of a deceased person's assets above an exempt threshold, calculated on the net estate before distribution to heirs.

A tax on the profit realized when an asset is sold for more than its acquisition cost, with rates and holding-period rules differing by asset type and jurisdiction.

The portion of gross income remaining after allowable deductions and exemptions, forming the base to which progressive income tax rates are applied.

An amount subtracted from gross income before tax is computed, reducing taxable income; its value to the taxpayer equals the deduction times the marginal tax rate.

A direct reduction of the tax owed rather than of taxable income, so it is worth the full peso amount regardless of the taxpayer's marginal bracket.

The total non-cash and deferred compensation offered by an employer, including health coverage, retirement contributions, leave, and allowances, valued as part of overall pay.

Mandatory ongoing education and training that certified planners must complete to maintain competence, stay current with rules, and renew their professional credentials.

The formal set of principles governing a planner's conduct, covering integrity, objectivity, confidentiality, competence, and fair dealing with clients and the public.