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Alphabet Soup – Some General Terms that Might Get Thrown Around

Posted by Jennifer P. Farrar | Jan 01, 2020 | 0 Comments

Investing has its own language, including beloved acronyms and shorthand.  Here's a list (by no means exhaustive) of general terms you might hear thrown around in this blog or elsewhere:

  • AUM assets under management, which is the total market value of the investments that a person or entity manages on behalf of clients.
  • BD – an abbreviation for a broker-dealer. A BD is a buyer and seller of securities, as well as a distributor of other investment products.  A BD must be registered with the SEC.  BDs include large subsidiaries of huge commercial and investment banks, as well as independent boutiques.  A wirehouse is a BD that sells its own products to customers, while an independent BD sells products from outside sources.  As a dealer, the firm acts on its own behalf for transactions in the firm's own account.  As a broker, the firm handles transactions behalf their clients.
  • CFP – Certified Financial Planner. The CFP designation issued by the CFP Board of Standards, Inc., to professionals who have completed extensive training and experience requirements and are held to rigorous ethical standards for personal financial planning.
  • CRD – Central Registration Depository. This is a database maintained by FINRA and used by the U.S. securities industry and its regulators. Web CRD consists of the registration records of broker-dealer firms and their associated individuals including their qualification, employment and disclosure histories. The general public can review reports generated from Web CRD using BrokerCheck.  BrokerCheck will generate certain disclosable current and background information regarding your broker or investment advisor.
  • ETF – Exchange traded fund. An ETF is an investment fund (aka basket of securities) traded on a stock exchange.  An exchange-traded fund (ETF) is a basket of securities you buy or sell through a brokerage firm on a stock exchange.  ETFs include diverse asset classes from traditional investments to alternative investments, such as commodities or currencies.
  • MBSMortgage-backed security(ies). An MBS is a type of asset-backed security, which is secured by a mortgage or collection of mortgages.
  • NAV – Net asset value. NAV is the value of a fund's assets less the value of its liabilities per unit.
  • REIT Real estate investment trust. A REIT is a company that owns and typically operates income-producing real estate or related assets (such as office buildings, shopping malls, apartments, hotels, resorts, self-storage facilities, warehouses, and mortgages or loans) as part of its own investment portfolio.
  • SRO – Self -regulatory organization. An SRO is a non-governmental organization that is empowered to create and enforce industry regulations and professional standards.  Examples of SROs including: FINRA, NYSE, ACLI and more.
  • UITUnit investment trust. UITs are portfolios of stocks, bonds, or mutual funds which are assembled by trustees and then sold in units consisting of a portion of all of the assets in the portfolio.  While UITs are similar to mutual funds, there are some distinct differences.

About the Author

Jennifer P. Farrar

Effective advocacy.  Sensible advice. Jennifer is the proprietor of Farrar Law, PLLC.  She attended Rollins College in Winter Park, Florida, where she received her Bachelor of Arts, summa cum laude.  Jennifer received her Juris Doctor, cum laude, from DePaul University College of Law in Chicag...


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