Financial language guide

Advice fee: The amount you pay for financial advice, agreed upfront so there are no surprises.

Adviser charge: The agreed fee you pay for financial advice.

Agreement in principle (AIP)/Decision in Principle (DIP): A statement from a lender showing how much they might be willing to lend you, based on basic checks. Some lenders also call this a ‘Decision in Principle’ (DIP).

Annual management charge (AMC): A fee charged by an investment manager for running a fund.

Annuity: A product that provides a guaranteed income for life or for a set period, usually bought with your pension savings.

Asset allocation: How your investments are spread across different types of assets, such as shares, bonds, and cash, to balance risk and return.

Assets Under Advice (AUA): The total market value of investments that we advise on your behalf.

Auto-enrolment: A government scheme where employers must automatically enrol eligible staff into a workplace pension.

Benchmark (investment): A standard or index used to measure the performance of your investments.

Beneficiary: A person or organisation you choose to receive benefits from your plan or estate when you die.

Bond / Gilts: A type of loan to a company or government that pays interest over a set period. UK government bonds are called gilts.

Buy-to-let: A property purchased specifically to rent out to tenants, with the aim of generating rental income and/or capital growth.

Capacity for Loss: How much the value of your investments could fall without affecting your standard of living or ability to meet your financial goals. It’s about what you can afford to lose – not just the level of risk you you’re comfortable with taking.

Capital gains tax (CGT): Tax you may pay on the profit when you sell certain assets, such as investments or property.

Cash flow modelling: A visual projection showing how your finances could look in the future, helping you understand the financial impact of life events and plan with confidence.

Chartered Wealth Manager: A highly qualified financial professional, recognised for their expertise, ethical standards, and commitment to ongoing learning.

Commission: A payment made to us by a product provider or platform for arranging or managing your plan. We’ll always be transparent about the amount and how it affects your costs. In retail investment advice, commissions are mostly banned, but they can still apply to mortgages, protection, and certain older products.

Commission cap: The maximum commission that can be paid on certain products, set by regulation or provider policy. In retail investment advice, commissions are mostly banned, but they can still apply to mortgages, protection, and certain older products.

Collective investment scheme: A fund where your money is pooled with other investors to buy a wide range of investments.

Critical illness cover: A type of insurance that pays a lump sum if you’re diagnosed with a specified serious illness, such as cancer, heart attack, or stroke.

Cohesion Core Service: Our essential financial planning service allowing you to get on track, with clear, actionable advice.

Cohesion Wealth Service: A comprehensive service covering a wide range of financial planning needs.

Cohesion Tailored Service: Our most personalised service offering complex planning and support, including additional hourly charges.

Contribution: A payment made regularly (e.g. monthly or annually) towards your investment or pension.

Defined benefit pension: A pension that pays a guaranteed income in retirement, usually based on your salary and years of service.

Defined contribution pension: A pension where you build up a pot of money from your, and your employer’s, contributions, plus investment growth.

Discretionary fund management (DFM): When a specialist investment manager makes day-to-day decisions about your investments on your behalf.

Diversification: Spreading your money across different investments to reduce risk.

Dividend: A payment made by a company to its shareholders, usually from profits.

Drawdown/Pension drawdown: Taking a flexible income from your pension while the rest remains invested.

Due diligence: The checks and research we carry out to make sure products, providers, and strategies are suitable and secure.

Early repayment charge (ERC): A fee you may have to pay if you pay off a mortgage balance before the end of its fixed or agreed term.

Ethical views: Your personal preferences for how and where your money is invested, for example avoiding certain industries or supporting businesses with strong environmental and social practices.

Equity/Shares: Ownership in a company. If you own shares, you own a small part of that business and are entitled to a share of the business profits which will be paid out as dividend and also to vote on various company matters.

Equity Release: A financial product allowing homeowners aged 55+ to release cash tied up in their property without needing to move.

ESG (Environmental, Social, Governance): A set of criteria used to assess a company’s impact on the environment, its social responsibilities, and how it’s governed.

Exit fee / Surrender penalty: A charge for closing an investment or pension early.

Fact find: A detailed discussion and record of your personal and financial circumstances, used to create a tailored plan.

Financial goals: The outcomes you want to achieve with your money, such as buying a home, funding education, or retiring comfortably.

Financial Planner: A qualified professional who works with you to understand your goals, create a plan, and help you make informed financial decisions.

Financial Planning: A process to help you organise your money and investments to achieve your life goals.

Fixed rate mortgage: A mortgage where the interest rate stays the same for a set period.

Fund / Investment fund: A professionally managed collection of investments, often spread across many companies or sectors.

Fund transfer costs: Charges applied when moving investments from one fund to another, either within the same provider or to a new one.

Group risk scheme: An employee benefit provided by a business, such as group life insurance or group income protection, that offers financial security to staff and their families.

Holistic financial planning: Looking at your finances as a whole, not just individual products, so every part of your plan works together.

Home reversion: A home reversion plan lets you sell a share of your property to a specialist provider in exchange for a tax-free lump sum or regular income, while retaining the right to live there rent-free. At the end of the plan, the provider receives their share of the property’s value. It can be a useful way to release cash from your home without moving, though it reduces the proportion of your property you’ll leave to heirs.

Impact investing: Investing to achieve positive, measurable social or environmental impact alongside a financial return.

Implementation Fee: A one-off charge applied when putting your financial plan into action, based on a percentage of your assets advised on.

Income protection: Insurance that pays you a regular income if you’re unable to work due to illness or injury.

Key person insurance: A policy that protects a business against the financial impact of losing a key employee.

Index/Index tracking: A list of investments that represent a section of the market, such as the FTSE 100. Index tracking funds aim to match its performance.

Inheritance tax (IHT): Tax that may be due on your estate when you die, above certain allowances.

Intergenerational Wealth Planning: Strategies to help transfer assets and wealth between generations effectively, managing tax and legal complexities.

Investments: Money you put into assets such as shares, bonds, or funds, aiming for growth or income over the medium to long term.

Investment Portfolio: A collection of financial assets such as funds, shares, bonds, and cash managed for you.

ISA (Individual Savings Account): A tax-efficient way to save or invest, where your returns are free from UK income and capital gains tax.

Loan-to-value ratio (LTV): The percentage of your property’s value that is borrowed as a mortgage.

Lender retention offer: A deal from your current mortgage provider to keep you as a customer when your existing rate ends, often without the need to switch lender.

Life cover/Life assurance: Insurance that pays out a lump sum or income to your chosen beneficiaries when you die.

Lifetime allowance (LTA): The now-abolished limit on the total value of pension benefits you could build up without extra tax charges.

Lifetime mortgage: A lifetime mortgage is a type of equity release that allows you to borrow against the value of your home while continuing to live there. Interest is usually rolled up and repaid, along with the loan itself, when the property is sold—often after you pass away or move into long-term care. It can be an effective way to access funds in later life, but it does reduce the inheritance you can leave.

Liquidity: How quickly and easily an asset can be turned into cash without losing value.

LPA (Lasting Power of Attorney): A legal document allowing someone to make decisions on your behalf.  A ‘Health and welfare’ LPA can only be used when you are unable to make your own decisions.  A ‘Property and financial affairs’ LPA can be used as soon as it’s registered if you would like someone to make decisions about your finances for you.

Mortgage term: The length of time over which your mortgage is scheduled to be repaid.

Minimum Fee: The lowest amount you will be charged for a service, regardless of portfolio size, or mortgage value.

Mutual fund: A type of pooled investment, similar to a unit trust or OEIC, managed by professionals.

Negative screening: Avoiding investments in certain industries or companies that don’t align with your values.

OEIC (Open-Ended Investment Company): An OEIC is a type of investment fund that pools money from multiple investors to buy a diversified range of assets, like shares or bonds. The value of your investment rises and falls with the market, and you can usually buy or sell shares in the fund at any time. OEICs offer flexibility and professional management, making them a convenient way to grow your savings over time.

Ongoing charge figure (OCF): The yearly cost of running a fund, including management and admin fees, shown as a percentage.

Ongoing Service Fee: An annual charge for maintaining and updating your financial plan, determining whether your existing arrangements continue to be suitable and making any changes to your plans.

Pension: A way of saving for retirement that offers tax advantages and helps you build an income for the future.

Personal allowance: The amount of income you can earn each tax year without paying income tax.

Platform: An online service that lets you see, manage, and hold your investments in one place, securely and efficiently.

Platform fee: A charge for using an investment platform to hold and manage your investments.

Portfolio: All of your investments held together as a whole.

Positive screening: Selecting investments in companies or sectors that actively support environmental or social good.

Procuration Fee: A commission paid by a mortgage lender to Cohesion for arranging your mortgage/equity release product.

Protection: Products designed to provide financial security if life takes an unexpected turn — such as life insurance, critical illness cover, or income protection.

Remortgage: Switching your mortgage to a new deal, either with the same lender or a different one.

Regular Premium: Ongoing payments towards insurance or investment products.

Risk Profile / tolerance: An assessment of how much investment risk you’re comfortable taking.

Savings: Money you’ve set aside, typically in cash, ready for short-term goals or emergencies.

Standard variable rate (SVR): The default interest rate your lender charges once your initial mortgage deal ends.

State Pension: A regular payment from the government once you reach State Pension age, based on your National Insurance record.

Suitability report: A document that explains why we’ve recommended certain products or strategies for you, in plain language.

Sustainable investing: Investing in a way that aims to meet present needs without compromising the future, often considering ESG factors.

Tax-free lump sum (PCLS): The portion of your pension (usually up to 25%) you can take as a tax-free cash payment when you start accessing it. Some older pensions have protected allowances above 25%.

Tax wrapper: A type of account, such as an ISA or pension, that offers tax advantages for your savings or investments.

Terminal illness benefit: An insurance feature that pays out if you’re diagnosed with a condition expected to cause death within a set timeframe.

Tracker mortgage: A mortgage where the interest rate moves in line with the Bank of England base rate, plus a set margin.

Transaction costs: Costs involved in buying and selling investments within a fund.

Trust: A legal arrangement that lets you set aside assets for the benefit of others, managed by trustees.

Underwriting: The assessment an insurer makes to decide if they can offer you cover, and at what cost.

Volatility: How much and how often the value of an investment goes up and down.

Will: A legal document that states how you want your assets to be distributed after you die.

Yield: The income your investment earns, shown as a percentage of its value.