Client Classification

A tax-advantaged education savings account (Section 529 Qualified Tuition Program) offering tax-free growth for qualified education expenses at any level. Covers K-12 tuition up to $10,000 per year, plus unlimited college expenses. Features no income limits, no age limits, changeable beneficiaries, and unique 5-year gift tax acceleration.

Example: A parent opens a 529 plan for their newborn with a $50,000 initial contribution. The account grows t...

An investor who meets specific income or net worth thresholds, qualifying them to invest in unregistered securities like private placements. Must have $200k+ income ($300k+ joint) or $1M+ net worth (excluding primary residence).

Example: An individual with $250k annual income qualifies as an accredited investor....

A brokerage account requiring full payment for all securities purchases with no borrowing allowed. Securities must be paid in full by settlement date (T+1 for stocks and bonds as of May 2024). The most conservative account type, suitable for risk-averse clients who want to avoid leverage and margin interest.

Example: A 72-year-old retiree opens a cash account to avoid any risk of leverage. She buys $10,000 in divide...

The process of arranging wealth transfer strategies to minimize taxes and ensure assets pass to intended beneficiaries. Includes wills, trusts (revocable and irrevocable), powers of attorney, beneficiary designations, and gifting strategies. Estate tax exemption is approximately $13.99 million per individual in 2025, with annual gift exclusion of $19,000 per recipient.

Example: A client with a $20 million estate establishes an irrevocable life insurance trust (ILIT) to exclude...

Large organizations that invest on behalf of members or clients, including banks, insurance companies, investment companies (mutual funds), trust companies, broker-dealers, and employee benefit plans with $1 million+ in assets. Subject to different regulatory treatment than retail investors under the Uniform Securities Act, including exemptions from state registration for certain transactions. NOT the same as accredited investors: wealthy individuals can be accredited but are never institutional.

Example: A state pension fund with $500 million in assets qualifies as an institutional investor and can part...

An offering of unregistered securities to a limited group of investors that is exempt from SEC registration requirements, primarily conducted under Regulation D. Most commonly structured as Rule 506(b) offerings (no general solicitation, up to 35 sophisticated investors plus unlimited accredited investors) or Rule 506(c) offerings (general solicitation permitted, only verified accredited investors). Securities sold are restricted and subject to resale limitations.

Example: A technology startup raises $25 million through a private placement under Rule 506(b) by selling equ...

An investor classification that allows performance-based compensation under Investment Advisers Act Rule 205-3. Requires either at least $1.1 million in assets under management with the adviser OR net worth in excess of $2.2 million (excluding primary residence). A subset of accredited investors with higher thresholds, specifically for charging performance fees.

Example: A client with $1.2 million under management with an adviser qualifies for performance fees (meets th...

SEC regulation providing exemptions from securities registration requirements for private placement offerings. Primary rules include Rule 506(b) allowing unlimited accredited investors plus up to 35 sophisticated investors without general solicitation, and Rule 506(c) allowing unlimited accredited investors with general solicitation permitted. Rule 504 permits offerings up to $10 million with fewer restrictions.

Example: A hedge fund raises $50 million through a Regulation D Rule 506(b) offering from 80 accredited inves...

An account registration allowing securities to transfer directly to a named beneficiary upon the account owner's death, bypassing probate. The owner retains complete control during their lifetime, and the beneficiary has no ownership rights until death occurs. TOD designations can be changed or revoked at any time.

Example: A 72-year-old retiree designates her two adult children as equal TOD beneficiaries on her $800,000 b...

Custodial accounts allowing irrevocable gifts to minors without establishing a trust. UGMA (Uniform Gifts to Minors Act) permits cash and securities; UTMA (Uniform Transfers to Minors Act) also permits real estate and other property. Gifts are irrevocable and cannot be changed to a different beneficiary. Assets transfer to minor at age of majority (18 for UGMA, up to 25 for UTMA depending on state). Subject to kiddie tax: unearned income over $2,700 taxed at parent's marginal rate until age 19 (or 24 if full-time student).

Example: A grandparent opens a UTMA account for their 10-year-old grandchild with $50,000. The grandparent is...