A quick-reference glossary of high-yield Series 66 terms covering state law, adviser regulation, investment recommendations, and ethics.
Use this glossary for quick recall when you need sharper exam language. Series 66 mixes investment knowledge with legal and ethical duties, so vague familiarity is often not enough.
Administrator: The state securities regulator with authority to enforce state securities law.
Asset allocation: Dividing investments among asset classes to match goals, risk tolerance, and constraints.
Custody: Holding or controlling client funds or securities in a way that triggers regulatory obligations.
Discretion: Authority to choose the security, amount, or action in a client account without advance approval for each trade.
Diversification: Reducing unsystematic risk by spreading investments across holdings or asset classes.
Federal covered adviser: An adviser regulated primarily under federal law rather than through full state registration.
Fiduciary duty: The obligation to act with loyalty and care in the client’s best interest.
Investment adviser representative (IAR): An associated person of an adviser who gives advice, manages accounts, or solicits advisory business.
Notice filing: A state filing required from some federal covered advisers instead of full state registration.
Private placement: A securities offering sold under an exemption from full public registration.
Prohibited practice: Conduct barred by the rules, such as misleading statements, undisclosed conflicts, or misuse of client assets.
Sharpe ratio: A measure of return relative to volatility after adjusting for the risk-free rate.
Soft dollars: Research or other benefits obtained through brokerage activity connected to client trades.
Suitability: The principle that a recommendation should fit the client’s objectives, risk tolerance, liquidity needs, time horizon, and related facts.
Wrap fee account: An account that bundles advisory, brokerage, and often administrative services into a single fee.