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Accumulation and Maintenance Trust - a type of trust. It may be used when funds are to be left for minors (children) with a view to the monies being spent on their upkeep/education, with any surplus going to them when they become adults.

Accumulation Unit - a unit of an investment fund (normally through a pension or life insurance policy). These are the standard units of the fund, and where documentation talks about Accumulation Units there will normally be another class of unit, usually called Initial (or Capital) units. Initial units are normally the units that are bought early in the policy and they have much higher charges than the Accumulation units. The term Accumulation Units can also apply to Unit Trust units that accumulate dividend income rather than pay it out.

Actuary - mathematicians whose expertise lies in the areas of risk assessment, probability and statistics, all of which underpin the whole concept of insurance and the setting of rates.

Added Years - a method of enhancing pension benefits by making extra contributions.

Additional Voluntary Contributions(AVC) - The payment of extra contributions over and above those required by scheme membership.

Advice - For legal purposes advice is given when an authorised person (e.g. your IFA) tells you what to do, as a result of analysis of your personal position. If you buy a financial services product as a result of advice you have much stronger rights than if you buy without advice (e.g. direct from a paper or over the Internet).

AIM - see Alternative Investment Market.

Allowances (tax) - Everyone is entitled to a certain amount of their annual income to be tax free.

Alternative Investment Market - AIM was established by the London Stock Exchange in 1995 specifically for young, entrepreneurial companies. The regulatory framework of AIM has been designed to enable growing businesses to access capital without being overburdened.

Annual Percentage Rate - a standardised measurement of the cost of borrowing money.

Annual Allowance - the maximum contribution you can make to your pension scheme in any one year.

Annuitant - person who gets income from an annuity.

Annuity - A form of policy where, in exchange for giving the company a lump sum, the annuitant gets an income for a fixed term, or until they die. E.g. 70 year old person has £20,000 and wants to maximise income. The bank pays £1000 a year in interest, but an insurance company offers a £1500 annuity. Buy the annuity and die the next year, the company wins. Live to 103 and the company loses.

Appointed Representative - A firm that is representing another financial company or firm, (operating in areas covered by the Financial Services Act).

Appropriate Personal Pension Scheme (or Plan) - A Personal Pension Plan specifically for contracting out of SERPS and the State Second Pension.

APPS - See Appropriate Personal Pension Scheme.

APR - see Annual Percentage Rate.

Arm’s Length – An Arm’s Length transaction is one where all parties act independently. The term normally arises as a warning in situations where people know each other and might rig a transaction to benefit themselves over others, (usually at the expense of the tax office or government). Where transactions must be seen to be Arm’s Length it usually means that independent assessment is required to confirm all values etc are fair market ones, or it may mean that the transaction simply cannot occur because of the close ties between the parties.

Asset backed investment - an investment whose value is backed by some form of property, e.g. houses, or shares, and whose value will fluctuate as those properties change value in the market.

Assignment - when the benefit of a policy is passed to someone else. For example a life insurance policy might be assigned to a lender so that if you die the lender gets its debt paid off.

Authorisation - subject to context, either that the company has authorisation to conduct investment business, or that they require your authorisation to do something (commonly to get information from insurance and investment companies about your policies and investments).

Authorised persons - people allowed by law to conduct investment business. Not all staff of financial companies are authorised, which means that if you call up and the person on the end of the line can't help and needs you to talk to someone else, it doesn't mean that they don't know or can't help, it means that the law won't let them help. This is called Consumer Protection.

AVC - see Additional Voluntary Contributions.