1. Glossary


Page last updated: 15 March 2021

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Adviser Business Statement – describes the adviser’s business and compliance arrangements


Affinity fraud

Investment frauds that prey on members of identifiable groups, such as religious or ethnic communities. These scams exploit the trust and friendship that exist in groups of people who have something in common.






Fixed interest debt investments that can be bought and sold, and may be traded on an exchange.


The fee you pay to a broker for buying or selling shares.





The money you initially put into an investment. (E.g. when you invest $100 in a bank term deposit this is your capital amount on which you get paid interest.)

Category 1 Products

Products with more of an investment focus including shares, managed funds and KiwiSaver.

Category 2 Products

Simpler products such as insurance, mortgages, and bank term deposits.

Class Service

A service targeted toward a wide class of people rather than an individual. (E.g.brochures, seminars and internet material).

Code Committee

The Code Committee developed the Code of Professional Conduct for Financial Advice Services.

Conflicts of Interest

A conflict of interest can occur when an adviser's interests are different from yours. (E.g. if an adviser is paid to sell an investment to people they could be tempted to sell you that product even if it is not suitable for you.)

Continuous Disclosure

Companies listed on a registered exchange have to disclose important information that could affect the price of their securities as soon as it is known. This keeps the whole market informed of materially price-sensitive information, and ensures all investors have equal access to it.

Continuous Issue Prospectus

A prospectus for securities that the issuer, in the ordinary course of its business, continuously offers to the public and that is not the first prospectus registered for that class of securities.

Contributory Mortgage

Investors' money is pooled and lent to someone, and this loan is secured against a piece of land. Generally investors' funds are lent to a property developer, and the value of the security on the land depends on the developer successfully completing and selling the development.





A type of debt security where the issuer's obligation to repay investors is secured by the issuer's assets. The value of a debenture depends on the value of the issuer's assets.

Debt Securities

Investments where you lend money to someone (e.g. a bank or other financial institution) and are paid interest on your money.


Putting your money into different types of investments to try to reduce your risk. If one type of investment fails or doesn't do as well as you expect, not all your invested money may be lost or affected.


A payment per share that a company makes to shareholders from its profits. (E.g. if a company pays 5c per share as a dividend and you hold 1000 shares, you will be paid $50.)




Equity Securities

Shares in a company.




Financial Institutions

Financial institutions include registered banks (i.e. banks that are registered with the Reserve Bank of New Zealand) and non-bank financial institutions (e.g. building societies, financial services cooperatives, credit unions, friendly societies, industrial and provident societies, and finance companies).

Financial Market Participant

A person or organisation required to be registered, licensed, appointed or authorised under financial markets legislation, or a person or organisation that carries out certain activities, such as being a public issuer.

Financial Services Provider

Includes financial advice providers, providers of client money or property services, building societies, credit providers, credit unions, money changers, finance companies, foreign currency exchange dealers, fund managers, insurers, investment portfolio managers, issuers and registered banks.


Fixed interest is a general term for debt securities that pay a specified rate of interest. Usually the fixed interest rate is for a specific term, and at the end of the term your money is returned to you. Often you also have the option of rolling over your money, i.e. continuing the investment at an agreed rate of interest for another term.


Investments in things like foreign currency, oil, electricity or wool where you invest now on a prediction of what the commodity will sell for at a later date. Futures contracts are a way of trying to profit (or minimize loss) from future movements in prices or values, without actually buying the commodity that the contract relates to.

Foreign exchange trading

The value of currencies changes constantly. Forex trading is the buying and selling of foreign currencies. People do it for one of two basic reasons:

  • to try to make a profit, which is risky, or
  • to provide certainty about the cost of future foreign currency payments, which is a way of lowering risk.  This is called ‘hedging’. An example of hedging is when you lock in an exchange rate today, for a payment that you need to make in that foreign currency next month.

See here for more information.




Generally accepted accounting principles (GAAP) are the standard framework of guidelines for financial accounting used in any given jurisdiction; generally known as accounting standards or standard accounting practice.

Group Investment Funds

A type of managed fund.




International Financial Reporting Standards (IFRS) is a set of accounting standards developed by an independent, not-for-profit organization called the International Accounting Standards Board (IASB).

Insider Trading

Insider trading is when a person with materially price-sensitive information about a public issuer that is not generally available to the public buys or sells (or encourages others to buy, hold or sell) the issuer’s securities to make a profit or avoid a loss. New Zealand law prohibits insider trading.


Money paid to you by a borrower in return for you lending your money to that borrower. Sometimes the interest is paid at regular intervals and at a fixed rate. The interest is either paid directly to you, or it may be added to the money you have invested. The latter is called compounding, and means you get interest on your interest.

Investment Plan

An investment plan can help you achieve your investment goals. You can do it yourself, perhaps with some help from www.sorted.org.nz, or you can get an investment adviser to draw up a plan for you.


A person, company or financial institution offering investments to the public.




Managed Funds

A fund of money paid in by several people which is managed by a professional fund manager. Managed fund is a broad term which includes superannuation schemes, unit trusts, group investment funds (GIFs) and some life insurance. If you join KiwiSaver you invest in a superannuation scheme which is a managed fund.

Management Fee

A fee you pay as an investor to have your money managed by a fund manager. Other fees can also apply e.g. an exit fee if you want to cash in your investment.






NZX Limited, currently New Zealand’s only registered exchange.




Participation Deed

A legal document similar to a trust deed that sets out what a fund manager can do with investors' money. The deed also explains investors' rights, such as the trustee’s powers to look after investors' interests.

Personalised Service

A service targeted toward an individual that takes into account their individual situation.


Document that contains legal and financial information about an investment, including what the money will be used for, details about people involved in the investment, important commitments the company has, and its most recent financial information.

Public Interest

In the interests or well-being of the general public.







Registered Bank

A financial institution that is registered as a bank with the Reserve Bank of New Zealand. The list of banks currently registered can be seen at www.rbnz.govt.nz

Reporting Entities

Organisations and people required to comply with the Anti-Money Laundering and Countering Financing of Terrorism Act. Reporting entities supervised by FMA include issuers, sharebrokers, financial advisers, trustee corporations, collective investment schemes and futures dealers.


Risk Profile

Your risk profile is the level of risk you are prepared to have in relation to your investments. Knowing your risk profile helps you choose investments that are right for you. Assess your profile at www.sorted.org.nz.




Savings Account

An account with a bank or other deposit-taking financial institution in which you are paid interest in return for depositing your money. These accounts are debt securities as you have lent your money to the bank or other financial institution, and have the right to be paid back.


Investments including: debt securities - where you lend your money to someone else and in return are paid interest; equity securities - where you buy shares in a company, may be paid dividends and have the chance of making a capital gain if you sell your shares at a higher price than you paid for them; investments in a managed funds - a fund of money paid in by several people which is managed by a fund manager; participatory securities - a catch all term for securities other than equity securities, debt securities, or investments in a managed fund.


Shares are equity securities and represent a share in a company. You may be paid regular dividends on your shares, and you have the chance of making a capital gain on your money if you sell your shares for more than you paid for them.

Statutory Supervisor

A person appointed to look after investors' interests for participatory securities.

Stock Exchange

The market place where shares are traded in companies that are listed. Currently, New Zealand’s only registered exchange is NZX Ltd.

Superannuation Schemes

A type of managed fund, where money paid in by several people is managed by a professional fund manager. If you join KiwiSaver you invest in a superannuation scheme which is a managed fund.




Term Deposit

An account with a bank or other deposit-taking financial institution in which you put money for a fixed term e.g. 6 months or a year. You are paid an agreed rate of interest and your money is repaid at the end of the term. Term deposits are debt securities.

Trust Deed

A legal document that sets out what a fund manager can do with investors' money. The deed also explains investors' rights, such as the trustees' powers to look after investors' interests.


A person appointed to look after investors' interests for certain securities e.g. those offered by credit unions, building societies and finance companies, and for unit trusts.




Unit Trust

A type of managed fund.