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Asset Allocation

Asset allocation refers to the overall mix of stocks, bonds and cash held in a portfolio.  In general, the stock portion of the allocation has the greatest risk but also the greatest return potential.  Bonds and cash (again, in general) are less risky and have lower expected returns.  Asset allocation considerations include:

  1. The time horizon for the goal you are investing toward
  2. The return required to achieve your goal tempered by your stomach for risk
  3. If you are retired or within five years of retirement, your expected withdrawal rate
  4. May also include consideration of
  • Current market valuation - also known as "dynamic asset allocation"
  • The presence of stock or bond proxies in the the investor's portfolio, such as income producing real estate or pension income


A broker acts as a middleman between you and the securities market and they usually charge a commission or a fee. Can be either human or electronic (a website). Brokers are held to a suitability standard.

Fee-Based Financial Advisor

Fee-based financial advisors may sell products as well as advice. The pitch usually goes something like "if you need life insurance, we'll sell it to you and the commission we earn will help offset your fee from us." FYI, Perk Planning is NOT FEE BASED.

Fee-Only Financial Advisor

Fee-Only financial advisors do not sell products (other than advice); their only source of compensation is their clients. They may charge a flat fee, hourly fee or a percentage of the assets they manage. Perk Planning is a Fee-Only firm.


A fiduciary is a person bound to act for another's benefit.

Fiduciary Standard

A financial advisor held to a fiduciary standard is required to act with undivided loyalty to the client. This includes disclosure of how the advisor is compensated and any corresponding conflicts of interest. Perk Planning adheres to the fiduciary standard for their clients.

Mutual Funds

A collection of stocks, bonds, real estate and/or alternative investments offered by investment companies and sold in shares to investors. Can be open-end, closed-end or unit investment trust. They can be further classified as index or actively managed.

Suitability Standard

The suitability standard says that a broker (or IAR) must do what is suitable for an investor based on that investor's particular circumstances. It requires that your broker have a reasonable basis for believing that the recommendation is suitable for you.

The standard does not demand that your broker do what is best for you – only that it be suitable. It also does not require your broker to reveal any conflicts of interest, like the commission the broker will receive if you buy the product recommended.


Want to learn more? Here are some relevant links to help you along.

Form Adv Pt 2 NAPFA