A quick-reference glossary of high-yield Series 65 terms covering adviser law, investment products, suitability, and portfolio basics.
Use this glossary for quick recall when a term feels familiar but not precise enough for exam work. Series 65 often tests distinctions that look small in prose but change the best answer completely in a recommendation or adviser-law question.
Asset allocation: The process of dividing a portfolio among asset classes to match goals, risk tolerance, and constraints.
Beta: A measure of how sensitive an investment is to movements in the broader market.
Custody: Holding client funds or securities directly or indirectly, or having authority that creates custody treatment under the rules.
Discretion: Authority to decide which security to buy or sell for a client without getting advance approval on each trade.
Diversification: Spreading investments across assets or strategies to reduce unsystematic risk.
Federal covered adviser: An investment adviser regulated primarily at the federal level rather than through full state registration.
Fiduciary: A person or firm obligated to act with loyalty and care in the client’s best interest.
Hedge fund: A privately offered pooled investment vehicle that may use leverage, derivatives, concentrated positions, or liquidity restrictions.
Investment adviser representative (IAR): An individual associated with an adviser who gives advice, manages accounts, or solicits advisory business.
Modern portfolio theory: A framework emphasizing diversification and the relationship between risk and expected return.
Net asset value (NAV): The per-share value of a fund after liabilities are subtracted from assets.
Portfolio turnover: A measure of how frequently securities inside a portfolio are bought and sold.
Sharpe ratio: A measure of return relative to total volatility after adjusting for the risk-free rate.
Soft dollars: Brokerage or research benefits received in connection with client trades.
Systematic risk: Market-wide risk that cannot be diversified away completely.
Wrap fee account: An account in which one bundled fee covers advisory, brokerage, and often administrative services.