Reference

Financial Planning Glossary

Plain-language definitions of the terms that come up most when evaluating a fee-only fiduciary advisor in Arizona — compensation models, regulatory terms, credentials, retirement accounts, and executive compensation. Each term links to a deeper guide where one exists.

Compensation models

Fee-Only: A compensation model where an advisor is paid only by the clients they serve — no commissions, no revenue-sharing, no third-party payments of any kind.
Fee-Based: A compensation model where an advisor charges client fees and can also earn commissions from product sales — a common source of confusion with 'fee-only' due to the similar wording.
Commission-Based: A compensation model where an advisor or agent is paid primarily through commissions on the products they sell, such as insurance policies or mutual funds.
AUM (Assets Under Management): A pricing model where an advisor charges a percentage — typically 0.5%-1.25% annually — of the portfolio they manage on your behalf.
Flat Fee: A pricing model where an advisor charges a fixed dollar amount regardless of portfolio size, common for financial planning engagements.
Retainer: A recurring monthly or quarterly fee for ongoing access to an advisor, common at subscription-model planning firms.

Fiduciary & regulatory terms

Fiduciary: A legal duty requiring an advisor to act in the client's best interest, with a duty of care and a duty of loyalty, rather than merely recommending 'suitable' products.
Suitability Standard: A lower standard of care, applied to broker-dealer representatives and some insurance sales, requiring only that a recommendation be suitable for the customer at the time of the transaction — not necessarily the best available option.
RIA (Registered Investment Adviser): A firm registered with the SEC or a state securities regulator (in Arizona, the Arizona Corporation Commission Securities Division) to provide investment advice, bound by fiduciary duty under the Investment Advisers Act of 1940.
Form ADV: The disclosure document every registered investment adviser must file, describing the firm's business, fees, conflicts of interest, and disciplinary history. Part 2A is the plain-language brochure version.
Regulation Best Interest (Reg BI): An SEC rule requiring broker-dealers to act in a customer's best interest when recommending securities transactions, without imposing the full ongoing fiduciary duty that investment advisers owe.
IAPD: The Investment Adviser Public Disclosure database (adviserinfo.sec.gov), a free tool for looking up an investment adviser's registration status and disciplinary history.

Credentials

CFP® (Certified Financial Planner): A certification from the CFP Board requiring an exam, education, experience requirements, and — since 2019 — a fiduciary duty on all financial advice given to clients.
EA (Enrolled Agent): A tax practitioner licensed by the IRS with unlimited rights to represent taxpayers, indicating tax-specific expertise beyond general financial planning.
CPA/PFS (Personal Financial Specialist): A financial planning credential available only to CPAs, combining accounting expertise with personal financial planning training.
CFA (Chartered Financial Analyst): A credential focused on investment analysis and portfolio management, more common among advisors and firms with an investment-management-heavy practice.

Retirement accounts & plans

401(k): An employer-sponsored retirement plan common in the private sector, often with an employer matching contribution.
403(b): A retirement plan similar to a 401(k), offered by public schools, universities, and nonprofit organizations — the primary supplemental savings vehicle for Arizona teachers and hospital-system employees.
ASRS (Arizona State Retirement System): The defined-benefit pension system covering most Arizona state and local government employees and K-12 public school teachers, serving more than 650,000 members statewide.
ORP (Optional Retirement Plan): A defined-contribution alternative to ASRS offered to eligible faculty and staff at Arizona's public universities, typically a one-time and largely irreversible election.
TSP (Thrift Savings Plan): The 401(k)-style retirement savings account available to federal employees and military members under FERS, known for very low expense ratios.
FERS (Federal Employees Retirement System): The retirement system covering most federal employees hired since 1987, combining a modest pension, Social Security, and the TSP.
RMD (Required Minimum Distribution): The minimum amount that must be withdrawn annually from most tax-deferred retirement accounts starting at a certain age (currently 73 under federal law), with penalties for missing them.
QCD (Qualified Charitable Distribution): A direct transfer from an IRA to a qualified charity, available starting at age 70½, which can satisfy RMD requirements without counting as taxable income.
Roth Conversion: Moving funds from a traditional (pre-tax) retirement account into a Roth account, paying income tax on the converted amount now in exchange for tax-free growth and withdrawals later.
IRMAA (Income-Related Monthly Adjustment Amount): An income-based surcharge on Medicare Part B and Part D premiums, determined by income reported two years prior — a common target of Roth conversion and withdrawal-sequencing planning.

Equity compensation & executive pay

RSU (Restricted Stock Unit): A grant of company stock that vests on a schedule and is taxed as ordinary income at vesting, common at large public technology and semiconductor employers.
ESPP (Employee Stock Purchase Plan): A benefit letting employees buy company stock at a discount, commonly 15% below market price, sometimes with a lookback provision that widens the effective discount.
ISO (Incentive Stock Option): A type of stock option, more common at pre-IPO and earlier-stage companies, that can trigger Alternative Minimum Tax on exercise even before any shares are sold.
NQDC (Nonqualified Deferred Compensation): A plan letting executives defer salary or bonus beyond what qualified plans like a 401(k) allow, subject to strict IRC Section 409A distribution timing rules.
409A: The section of the Internal Revenue Code governing nonqualified deferred compensation distribution timing — elections under it are largely irrevocable once made.
SERP (Supplemental Executive Retirement Plan): A nonqualified retirement plan some employers offer senior executives beyond what qualified plans permit, often unfunded and dependent on the employer's ongoing solvency.
10b5-1 Plan: A predetermined trading schedule executives and insiders can set up in advance to buy or sell company stock, providing a defense against insider-trading claims.

Military & federal benefits

BRS (Blended Retirement System): The military retirement system combining a reduced pension with government-matched TSP contributions, replacing the legacy High-3 system for most who entered service after 2018.
SBP (Survivor Benefit Plan): An election letting a retiring service member continue a portion of their pension to a spouse after death, in exchange for a monthly premium — a permanent, largely irreversible decision made at retirement.
FEHB (Federal Employees Health Benefits): The health insurance program for federal civilian employees, which requires meeting specific enrollment conditions before retirement to continue coverage into retirement.

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