# Wealth and Advice Glossary

> 39 terms from the Investing & Digital Assets book's Wealth and Advice part, each defined in a line and linked to the chapter that explains it.

- **Applicable age (RMD):** the age at which traditional IRA required minimum distributions begin: 73 for someone who reaches 72 after 2022 and 73 before 2033, 75 for someone who reaches 74 after 2032 ([IRAs & Retirement Accounts](https://www.syntaqx.com/books/investing-and-digital-assets/retirement-accounts#required-minimum-distributions)).
- **Block order:** one market order for the combined quantity of many client accounts, filled and then allocated back to them at the average price by a rule fixed before the order is sent ([RIA Custodians & Advisor Platforms](https://www.syntaqx.com/books/investing-and-digital-assets/advisor-platforms#block-trading-and-allocation)).
- **Cash drag:** the return a portfolio gives up by holding cash instead of its invested assets, about the cash weight times the difference between the invested return and the cash yield ([Robo-Advisors & Model Portfolios](https://www.syntaqx.com/books/investing-and-digital-assets/robo-advisors#cash-drag-and-the-schwab-order)).
- **Cherry-picking:** allocating a block's better-priced fills to favored accounts after prices are known; prevented by locking the allocation before the order goes out ([RIA Custodians & Advisor Platforms](https://www.syntaqx.com/books/investing-and-digital-assets/advisor-platforms#block-trading-and-allocation)).
- **Composite (GIPS):** a group of portfolios managed to one strategy whose asset-weighted return a firm presents; every actual, fee-paying, discretionary segregated account must be in at least one ([Portfolio Accounting & Performance](https://www.syntaqx.com/books/investing-and-digital-assets/portfolio-accounting#gips)).
- **Direct indexing:** owning an index's constituent stocks in the account instead of a fund, so individual stocks can be harvested, excluded or tilted at the cost of tracking error ([Tax-Loss Harvesting & Direct Indexing](https://www.syntaqx.com/books/investing-and-digital-assets/tax-loss-harvesting-and-direct-indexing#direct-indexing)).
- **Direct rollover:** a distribution from a retirement plan paid straight to the receiving IRA's custodian, with no withholding and no 60-day clock; Form 1099-R code G ([IRAs & Retirement Accounts](https://www.syntaqx.com/books/investing-and-digital-assets/retirement-accounts#rollovers-and-the-60-day-rule)).
- **Drift:** the distance between an account's current weights and its model's targets, measured per asset class or for the whole portfolio ([Robo-Advisors & Model Portfolios](https://www.syntaqx.com/books/investing-and-digital-assets/robo-advisors#rebalancing-and-drift-bands)).
- **Drift band (tolerance):** the drift beyond which a threshold rebalance runs, for example 3% or 5% ([Robo-Advisors & Model Portfolios](https://www.syntaqx.com/books/investing-and-digital-assets/robo-advisors#rebalancing-and-drift-bands)).
- **Dual registrant:** a firm registered as both a broker-dealer and an investment adviser, which must say in which capacity it acts ([Advice, Reg BI & Conduct](https://www.syntaqx.com/books/investing-and-digital-assets/advice-and-conduct#broker-or-adviser)).
- **External cash flow:** money or assets crossing the boundary of the portfolio being measured (deposits, withdrawals, transfers), as opposed to the portfolio's own income and trades ([Portfolio Accounting & Performance](https://www.syntaqx.com/books/investing-and-digital-assets/portfolio-accounting#external-flows-and-valuation-points)).
- **Fiduciary duty (adviser):** the duty of care and loyalty an investment adviser owes a client under the Advisers Act for the whole relationship, shaped by agreement but never waived ([Advice, Reg BI & Conduct](https://www.syntaqx.com/books/investing-and-digital-assets/advice-and-conduct#the-adviser-s-fiduciary-duty)).
- **Form 1099-R:** the report of each distribution from a retirement account, with its taxable amount, withholding and a distribution code ([IRAs & Retirement Accounts](https://www.syntaqx.com/books/investing-and-digital-assets/retirement-accounts#forms-5498-and-1099-r)).
- **Form 5498:** the IRA custodian's annual report of contributions by kind and tax year, year-end value and whether an RMD is due ([IRAs & Retirement Accounts](https://www.syntaqx.com/books/investing-and-digital-assets/retirement-accounts#forms-5498-and-1099-r)).
- **Form ADV:** an adviser's registration and disclosure form: Part 1 (registration data), Part 2A (the brochure) and 2B (supplements), and Part 3 (Form CRS) ([Advice, Reg BI & Conduct](https://www.syntaqx.com/books/investing-and-digital-assets/advice-and-conduct#form-adv)).
- **Form CRS (relationship summary):** the short document a broker-dealer or adviser delivers to retail investors describing services, fees, conflicts and its standard of conduct, at most two pages (four for a combined dual registrant) ([Advice, Reg BI & Conduct](https://www.syntaqx.com/books/investing-and-digital-assets/advice-and-conduct#form-crs)).
- **Hypothetical performance:** performance not actually achieved by any of the adviser's portfolios (model, backtested, targeted or projected), usable in advertising only under the marketing rule's conditions ([Advice, Reg BI & Conduct](https://www.syntaqx.com/books/investing-and-digital-assets/advice-and-conduct#the-marketing-rule)).
- **Indirect (60-day) rollover:** a retirement distribution paid to the owner and redeposited in an IRA within 60 days of receipt; IRA-to-IRA rollovers are limited to one per 12 months ([IRAs & Retirement Accounts](https://www.syntaqx.com/books/investing-and-digital-assets/retirement-accounts#rollovers-and-the-60-day-rule)).
- **IRA match:** a broker's contribution to a customer's IRA as a percentage of their own contribution, kept only if conditions such as a holding period are met ([IRAs & Retirement Accounts](https://www.syntaqx.com/books/investing-and-digital-assets/retirement-accounts#matches)).
- **Marketing rule:** Advisers Act Rule 206(4)-1, governing adviser advertisements: general prohibitions, testimonials and endorsements, third-party ratings and performance ([Advice, Reg BI & Conduct](https://www.syntaqx.com/books/investing-and-digital-assets/advice-and-conduct#the-marketing-rule)).
- **Model portfolio:** a versioned set of target weights by asset class, with the tickers that represent each class, its drift band and its cash weight ([Robo-Advisors & Model Portfolios](https://www.syntaqx.com/books/investing-and-digital-assets/robo-advisors#model-portfolios)).
- **Modified Dietz:** an approximation of the money-weighted return: the gain divided by the starting value plus time-weighted flows ([Portfolio Accounting & Performance](https://www.syntaqx.com/books/investing-and-digital-assets/portfolio-accounting#two-returns-on-the-same-cash-flows)).
- **Money-weighted return (MWR):** the internal rate of return on an account's starting value and cash flows; measures the investor's outcome ([Portfolio Accounting & Performance](https://www.syntaqx.com/books/investing-and-digital-assets/portfolio-accounting#two-returns-on-the-same-cash-flows)).
- **Pure gross-of-fees return:** a wrap fee portfolio's return before the whole bundled fee, shown under GIPS only as labeled supplemental information ([Portfolio Accounting & Performance](https://www.syntaqx.com/books/investing-and-digital-assets/portfolio-accounting#gips)).
- **Regulation Best Interest (Reg BI):** Rule 15l-1, requiring a broker-dealer recommending a security, strategy or account to a retail customer to act in the customer's best interest, through disclosure, care, conflict of interest and compliance obligations ([Advice, Reg BI & Conduct](https://www.syntaqx.com/books/investing-and-digital-assets/advice-and-conduct#regulation-best-interest)).
- **Required beginning date:** April 1 of the year after the IRA owner reaches the applicable age, the deadline for the first RMD ([IRAs & Retirement Accounts](https://www.syntaqx.com/books/investing-and-digital-assets/retirement-accounts#required-minimum-distributions)).
- **Required minimum distribution (RMD):** the annual withdrawal from a traditional IRA after the applicable age: the prior December 31 balance divided by the distribution period from the IRS tables ([IRAs & Retirement Accounts](https://www.syntaqx.com/books/investing-and-digital-assets/retirement-accounts#required-minimum-distributions)).
- **Retail communication (FINRA 2210):** a broker-dealer communication distributed or made available to more than 25 retail investors within any 30 calendar-day period, approved by a principal before use ([Advice, Reg BI & Conduct](https://www.syntaqx.com/books/investing-and-digital-assets/advice-and-conduct#finra-rule-2210-for-broker-communications)).
- **RIA custodian:** a broker-dealer or bank that holds an independent adviser's client accounts in the clients' names, sends their statements and executes and bills on the adviser's instructions ([RIA Custodians & Advisor Platforms](https://www.syntaqx.com/books/investing-and-digital-assets/advisor-platforms)).
- **Robo-adviser:** an investment adviser that gives software-generated advice and manages portfolios through automated jobs, owing the same fiduciary duty as any adviser ([Robo-Advisors & Model Portfolios](https://www.syntaqx.com/books/investing-and-digital-assets/robo-advisors)).
- **Substitute security:** a fund bought after a harvest that keeps the asset class's exposure but tracks a different index, so it isn't substantially identical to the one sold ([Tax-Loss Harvesting & Direct Indexing](https://www.syntaqx.com/books/investing-and-digital-assets/tax-loss-harvesting-and-direct-indexing#substitute-securities)).
- **TAMP (turnkey asset management program):** an outsourced provider of models or managed sleeves, rebalancing, trading and often billing for advisers ([RIA Custodians & Advisor Platforms](https://www.syntaqx.com/books/investing-and-digital-assets/advisor-platforms#tamps-and-model-marketplaces)).
- **Tax alpha:** the after-tax return a harvesting program claims to add; mostly deferral, decaying over time, and often hypothetical ([Tax-Loss Harvesting & Direct Indexing](https://www.syntaqx.com/books/investing-and-digital-assets/tax-loss-harvesting-and-direct-indexing#tax-alpha-and-its-limits)).
- **Tax-loss harvesting:** selling a lot below its basis to realize a loss and buying a substitute that keeps the exposure without washing the loss ([Tax-Loss Harvesting & Direct Indexing](https://www.syntaqx.com/books/investing-and-digital-assets/tax-loss-harvesting-and-direct-indexing)).
- **Time-weighted return (TWR):** the return from chaining sub-period returns split at every external flow, unaffected by flows; measures the manager ([Portfolio Accounting & Performance](https://www.syntaqx.com/books/investing-and-digital-assets/portfolio-accounting#two-returns-on-the-same-cash-flows)).
- **Tracking error:** the standard deviation of the difference between an account's return and its benchmark's ([Tax-Loss Harvesting & Direct Indexing](https://www.syntaqx.com/books/investing-and-digital-assets/tax-loss-harvesting-and-direct-indexing#direct-indexing)).
- **Unified managed account (UMA):** one account split into sleeves following different models or managers, with an overlay that nets trades and manages taxes across them ([RIA Custodians & Advisor Platforms](https://www.syntaqx.com/books/investing-and-digital-assets/advisor-platforms#tamps-and-model-marketplaces)).
- **Uniform Lifetime Table:** the IRS table of distribution periods by age used for most IRA owners' RMDs (Table III in Publication 590-B) ([IRAs & Retirement Accounts](https://www.syntaqx.com/books/investing-and-digital-assets/retirement-accounts#required-minimum-distributions)).
- **Wrap fee:** one asset-based fee bundling advice, trading and custody ([Robo-Advisors & Model Portfolios](https://www.syntaqx.com/books/investing-and-digital-assets/robo-advisors#fees)).

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