Financial Professionals – Background Checks

You should check out the registration status and background of any financial professional before becoming a client, even if a close friend or family member recommends a financial professional. An easy way to check out a financial professional is to use the free search tool available on Investor.gov, which will direct you to the SEC’s Investment Adviser Public Disclosure website (IAPD website).

Target Date Fund

A diversified mutual fund that automatically shifts towards a more conservative mix of investments as it approaches a particular year in the future, known as its "target date." A target date fund investor picks a fund with the right target date based on his or her particular investment goal. The managers of the fund then make all decisions about asset allocation, diversification, and rebalancing. Target date funds also are known as lifecycle funds.

Mutual Funds

A mutual fund is an SEC-registered open-end investment company that pools money from many investors. It invests the money in stocks, bonds, short-term money-market instruments, other securities or assets, or some combination of these investments. The combined holdings the mutual fund owns are known as its portfolio, which is managed by an SEC-registered investment adviser. Each mutual fund share represents an investor’s part ownership of the mutual fund’s portfolio and the income the portfolio generates.

Stock

An instrument that signifies an ownership position (called equity) in a corporation, and a claim on its proportional share in the corporation's assets and profits. Most stocks also provide voting rights, which give shareholders a proportional vote in certain corporate decisions, such as the election of corporate directors.

Time Horizon

Your time horizon is the number of months, years, or decades you need to invest to achieve your financial goal.

Asset Classes

Investments that have similar characteristics. The three main asset classes are stocks, bonds, and cash.

Lifecycle Funds

A diversified mutual fund that automatically shifts towards a more conservative mix of investments as it approaches a particular year in the future, known as its "target date." A lifecycle fund investor picks a fund with the right target date based on his or her particular investment goal. The managers of the fund then make all decisions about asset allocation, diversification, and rebalancing. Lifecycle funds also are known as target date funds.

Investment Adviser

An investment adviser is a

  • firm or person
  • that, for compensation, engages
    • in the business of providing investment advice to others about the value of or about investing in securities – stocks, bonds, mutual funds, exchange traded funds (ETFs), and certain other investment products

and/or

Risk Tolerance

An investor's ability and willingness to lose some or all of an investment in exchange for greater potential returns.