If you are unfamiliar with any terms, you will find this glossary page useful.

Asset Allocation

Asset allocation is an investment strategy that aims to balance risk and reward for an investor. This is accomplished by apportioning a portfolio’s assets according to the individual’s goals, risk tolerance and investment time horizon.


Business Risk

Events that only affect a specific company or industry, such as the BP Gulf of Mexico oil spill. The adverse impact on its revenue or operating expenses may cause the value of the company stock to drop.


Canadian Investment Manager

The Canadian Investment Manager designation is earned through an education stream of the Canadian Securities Institute. The CIM qualifies an individual for licensing in discretionary portfolio management in Canada.

Certified Financial Planner

Financial Planning Standards Council develops, promotes and enforces professional standards in financial planning. A Certified Financial Planner (CFP) professional meets internationally recognized standards of knowledge, skills and ethics.


CFA Charterholder

This credential is widely regarded in the global financial industry for its rigorous focus on current investment knowledge, analytical skill, and ethical standards. The CFA designation symbolizes the knowledge, discipline and integrity you should expect from a portfolio manager.


Chartered Professional Accountant

The Chartered Professional Accountant (CPA) designation is given to accounting professionals in Canada after rigorous study, examination and hands-on experience. The role of a CPA is viewed as a trusted professional, known for technical competence, integrity, objectivity and a commitment to the public interest.


Currency Risk

Currency risk arises from the change in the price of one currency relative to another.


Discretionary Portfolio Management

A discretionary portfolio manager independently manages the funds of each client in accordance with the needs of the client.


Economic Cycle

The economic cycle is the period during which a country’s economy moves from expansion to contraction and back again. The economic cycle is influenced by many forces including: inflation, interest rates, fiscal and monetary policy, and natural events.


Economic Risk

When the overall economy experiences a downturn (or recession), the earnings capabilities of most companies are, at least temporarily, adversely impacted. A decline in anticipated future earnings usually lowers stock prices.


Financial Risk

Financial risk is the dollar or percentage decline in value an investor can accept, given their need for capital preservation, income and overall level of wealth.


Inflation Risk

The chance that investment returns won’t keep pace with inflation over time, and consequently erode the investor’s purchasing power.


Interest Rate Risk

Marketable fixed income investments, like bonds, are sensitive to changes in interest rates. Bond prices adjust in the opposite direction to interest rate movements.


Intrinsic Value

Intrinsic value is what a company is really worth, as opposed to what investors are currently willing to pay for the company’s stock, i.e. market price.


Investment Management

Investment management refers to portfolio management and the trading of securities to achieve a specific investment objective. It also commonly refers to the buying and selling of securities within a portfolio.


Investment Policy Statement

A portfolio manager develops a written agreement (usually known as an Investment Policy Statement or IPS that takes into account your specific needs. Your IPS is the basis upon which your portfolio manager selects an appropriate mix of investments and makes discretionary adjustments to your portfolio.


Investment Portfolio

A collection of securities, or types of investment vehicles, designed to spread the risk of possible losses due to below expectations performance of any one investment. It usually includes securities, such as bonds, income equities, stocks, and pooled or exchange traded funds.


Investment Risk

The possibility an investor’s actual return on an investment will be lower than expected due to the unpredictable direction of markets.


Liquidity Risk

The possibility of losses arising from situations in which there is not enough cash to meet investors’ immediate needs. Securities whose market prices are inherently volatile (like stocks) compromise liquidity.


Longevity Risk

Given the uncertainty of a life span, longevity risk is the chance that an investor outlives their money.


Management Expense Ratio

The percentage of the fund’s total assets deducted from its returns each year to cover administrative expenses, like management fees, sales charges, trading costs, commissions, and so on.

Management Fee

A management fee is a periodic payment that is made for investment and portfolio management services. The fee covers not only investment advisory services, but administrative services as well. Usually, the fee is calculated as a percentage of the assets under management.

Market Cycle

The market cycle is the period of time during which stock prices rise, then fall, and then recover again. The market cycle generally runs ahead of the concurrent economic cycle.


Market Risk

The chance that the value of a security will decrease due to changes in environmental factors: stock price levels, interest rates, foreign exchange rates or commodity prices. Market risk affects almost all types of investments, including stocks, bonds and real estate.


Marketability Risk

An investor’s ability to readily convert an investment to cash at prevailing market prices, which is a function of trade volume and bid-ask spreads.


Portfolio Management

The art and science of making decisions about investment mix and policy, matching investments to objectives, asset allocation for individuals, and balancing risk against performance. Portfolio management is all about strengths, weaknesses, opportunities and threats in the choice of debt versus equity, domestic versus international, growth versus safety, and many other tradeoffs encountered in the attempt to maximize return at a given appetite for risk.


Portfolio Manager

Portfolio managers are firms and people who manage investment portfolios on behalf of private clients. Portfolio managers differ from mass-market or retail investment managers because they manage larger amounts of money for fewer clients.


Private Client

Private clients are individuals and families who have a significant financial portfolio and require expertise and access to investments beyond those available to the mass market.These individuals want to earn reasonable returns for the risk they are prepared to take.


Risk Perception

A subjective judgment held by a person about the characteristics and severity of a risk, i.e. likelihood, magnitude and timing of its effect.


Risk-reward Relationship

The concept implies that potential return rises with an increase in risk. Accordingly, an investor must accept the possibility of loss to achieve higher return on invested money.


Risk Tolerance

The degree of uncertainty that an investor can handle in regard to a negative change in the value of an investment portfolio is personal risk tolerance.


Separately Managed Account

In a separately managed account, each client’s investments are held completely separate from the holdings of other investors. This way, private clients get portfolios individually tailored to their situation and preferences.


Trailing Commission

A trailing commission is money you pay an advisor each year that you own a pooled investment product, like mutual funds. The fee compensates the advisor for financial advisory services, like actively servicing your account and making constructive suggestions. Not all mutual funds pay trailing commissions.


Valuation Risk

The original purchase price paid for security is too high.


Wealth Management

Wealth management is a term generally used to describe a highly customized and sophisticated portfolio management and investment planning service directed to private clients. Wealth management goes beyond managing investments to address a client’s entire financial situation.