A requirement that an investment advisor use due diligence and learn essential facts about each client and every order, to ensure investment recommendations are appropriate. These facts include the client’s financial status, family commitments and financial goals.
An advisor’s responsibility to ensure each client buys only suitable investments. This responsibility is set out in all provincial securities acts.
The use of borrowed funds to invest.
The obligation to provide or repay cash, goods or services at a future date. See also “asset.”
An insurance product that guarantees payments for the rest of an annuitant’s life. See also “annuity.”
A personal retirement income fund used to hold locked-in assets — which are often converted from a locked-in pension account such as a locked-in retirement account (LIRA). Life income funds have annual minimum and maximum withdrawal requirements. Registered retirement savings plan (RRSP) funds cannot be transferred to a life income fund but can be transferred to a registered retirement income fund (RRIF).
A contract between a policy holder (the insured) and an insurer, in which the insurer promises to pay a cash sum to the policy’s named beneficiary upon the death of the policy holder, in exchange for a monthly or annual premium which the policy holder is alive.
A loan of a predetermined amount that is accessible as needed and repaid usually over a period time but can be repaid immediately. See also “credit limit.”
The ease with which an asset can be sold at its market value. Cash is considered the most liquid asset.
A ratio that describes a company’s ability to meet short-term liabilities, calculated by dividing a company’s current assets by current liabilities. See also “current ratio.”
A registered retirement savings plan (RRSP) that generally prevents the account owner from making withdrawals before a certain age, depending on the province of residence. Also known as a “locked-in retirement account.”
When an investor purchases an investment and expects the value to rise, the position is said to be long. See also “short position.”
Debts or other liabilities that a company will still have one year from now.
A bias toward the fear of losing money, even if it means missing out on more significant price gains.