Glossary
Every term highlighted in an article, in plain words, with at least one source and the article where it comes up.
4% rule
The 4% rule comes from US research in the 1990s (William Bengen, then the “Trinity study”) which found that a retiree withdrawing 4% of a stock-and-bond portfolio in the first year, and the same inflation-adjusted amount thereafter, would historically not have run out of money over 30 years. It assumes US historical returns, a 30-year horizon and no flexibility, all of which may not apply to a given person. The MIT/Stanford study cited in the article found that 98% of the withdrawal advice given by AI models simply restated this rule, an example of models leaning on heuristics rather than on the individual's situation.
Account aggregation
Account aggregation is the automatic collection of balances, positions and transactions from several financial institutions into a single view. In Europe it relies on licensed intermediaries (in Finary's case Powens, Plaid and Flanks) which connect to banks either through the official open-banking interfaces created by the PSD2 directive or, when no interface exists, by logging in and reading the website as a user would. Access is read-only: the aggregator can see your money but cannot move it.
Assurance-vie
Assurance-vie is a life-insurance contract used in France primarily as a savings and investment vehicle rather than as death cover. Money is invested in a capital-guaranteed euro fund, in unit-linked funds (ETFs, equity or bond funds, real-estate funds), or both. Withdrawals after eight years benefit from an annual tax allowance, and the contract passes to named beneficiaries outside the normal estate rules. Fees vary widely between contracts, which is why comparison tools such as Finary's fee scanner exist, and why Finary launched its own contract, Finary Life, in 2025.
Benchmark
A benchmark is a standardised test used to measure and compare AI systems: a collection of questions, documents or tasks with reference answers and a scoring rule. Finance benchmarks range from multiple-choice exams (CFA questions, financial-literacy quizzes) to execution tasks with exact outputs (TaxCalcBench's tax returns, Vals AI's analyst tasks, SpreadsheetBench's spreadsheets). Scores are only comparable within one benchmark, and a high score on an exam does not predict a high score on a task, which is the central point of the article.
Bond ladder
A bond ladder spreads a bond allocation across several maturities. Each rung is held to maturity, so its price swings along the way do not matter, and the money it returns is reinvested at the long end of the ladder at whatever rate then prevails. If rates rise, reinvestments earn more; if they fall, the remaining rungs keep the old higher coupons. The result is a predictable income and an average duration that stays roughly constant without forecasting. Individual government bonds, term deposits and the target-maturity bond ETFs launched in recent years can all serve as rungs; a conventional bond fund cannot, because it never matures.
Bond yield
A bond pays fixed coupons and repays its face value at maturity. Its yield is the interest rate that makes those future payments worth exactly today’s market price. Because the payments are fixed, the price and the yield move in opposite directions: if investors demand a higher return, the price must fall. The 10-year government bond yield is the benchmark from which mortgage rates, corporate borrowing costs and the discount rate applied to company profits are all derived, which is why a move in the US 10-year Treasury ripples into household finances everywhere.
CFA
The Chartered Financial Analyst designation is awarded by the CFA Institute to candidates who pass three sequential exams covering ethics, economics, accounting, valuation, portfolio management and wealth planning, and who have several years of relevant work experience. It is the standard credential for investment analysts and fund managers worldwide, and each level takes candidates hundreds of hours of study. Human pass rates hover between 40% and 50%; in 2025 several AI reasoning models passed all three levels, which is why it appears in the article as a benchmark of financial knowledge.
CFP
A Certified Financial Planner is a personal-finance adviser who has passed the CFP Board's exam on retirement, tax, insurance, investment and estate planning, meets education and experience requirements, and commits to act as a fiduciary when giving advice. The CFP Board, the US non-profit that awards the mark, is cited in the article both for its exam (used as an AI benchmark by the planning startup Origin) and for its consumer surveys on AI-generated advice.
Code execution
Code execution (called the analysis tool in Claude, advanced data analysis in ChatGPT, and code execution in the Gemini API) lets the model write a script, typically in Python or JavaScript, run it in a sandbox and use the result. Because language models predict text rather than compute, they are unreliable at arithmetic: a 2023 study found GPT-4 got three-by-three-digit multiplication right 59% of the time. With code execution the arithmetic is done by a real interpreter, so a compound-interest or amortisation calculation becomes exact and reproducible. Every major vendor's documentation now recommends it for any numerical task.
Duration
Duration measures the sensitivity of a bond’s price to interest rates. It is expressed in years and is close to the weighted average time until the bond’s cash flows are received, so a 30-year bond has a much higher duration than a 2-year bond. The practical rule is that a one-percentage-point rise in yields cuts the price by roughly the duration in per cent: a fund with a duration of 16 loses about 16%, one with a duration of 2 loses about 2%. This is why long-dated government bond funds lost money in 2022 and again in 2026 even though the bonds themselves never defaulted. Every bond fund publishes its duration on its factsheet.
ECB deposit rate
The ECB sets three rates, of which the deposit facility rate has been the effective policy rate since 2022 because banks hold abundant reserves. It determines the overnight rate €STR, which in turn feeds the Livret A formula, money-market fund yields, and the reference rates of variable-rate mortgages across the euro area. The ECB cut the rate from 4.00% in 2024 to 2.00% by June 2025, then raised it to 2.25% on 11 June 2026 in response to the oil-driven inflation rebound, the first increase since 2023.
Euro fund (fonds en euros)
In a French life-insurance contract, the euro fund is the part where the insurer guarantees the capital and credits a return once a year, typically in January for the previous year. The insurer invests the money mainly in bonds bought over many years, so the return is an average of old and new yields: when rates rise, the fund’s return lags for several years, and when rates fall it stays high for a while. Insurers also smooth returns with reserves. The average return was 2.63% for 2025, unchanged from 2024, and industry analysts expect around 2.9% to 3% for 2026 as bonds bought at today’s higher yields feed through.
Federal funds rate
The federal funds rate is the interest rate at which US banks lend reserves to each other overnight. The Federal Reserve steers it within a target range decided at the Federal Open Market Committee’s eight scheduled meetings a year, and publishes each decision with the vote count and any dissents. Raising the range makes credit dearer to slow inflation; cutting it does the opposite. The Fed cut three times in late 2025 to a range of 3.50% to 3.75%, held through the first half of 2026, and its new chair signalled in late August that increases were on the table.
Fiduciary duty
A fiduciary duty is the highest standard of care in law: the person owing it must put the other party's interests ahead of their own, avoid conflicts of interest and disclose material facts. Registered investment advisers in the US owe it under the Investment Advisers Act; EU investment firms owe a comparable “best interest” duty under MiFID II, and French CIF advisers under the monetary code. The duty attaches to a licensed person or firm, which is why the output of a consumer AI assistant, however good, is legally information rather than advice, and why the model vendors' own terms require a licensed professional in the loop.
Form 2086
French residents who sell crypto-assets for euros (or use them to buy goods) must declare each taxable disposal on form 2086, attached to the annual income-tax return, showing the sale price, the total acquisition cost of the portfolio and the resulting gain or loss for that transaction. The net gain is taxed at the 30% flat rate by default. Because the calculation depends on the whole portfolio's value at each sale, people with dozens of transactions rely on specialised software; Finary provides a CSV export but does not generate the form.
Hallucination
In AI, a hallucination is an output that is fluent and plausible but not grounded in the model's inputs or in reality. Language models hallucinate because they generate the most likely-sounding continuation rather than retrieving verified facts. Measured rates depend heavily on the task: on grounded summarisation the best models fabricate in a few per cent of cases, while on open questions about tax rules or financial products the consumer tests cited in the article found errors in a third to half of answers. Hallucinations are most dangerous in finance when they concern a threshold, a date or a product name, because they look exactly like correct answers.
Investment-firm licence (PSI)
In France a prestataire de services d’investissement (PSI) is a bank or investment firm authorised by the ACPR, the banking supervisor, with the AMF's approval of its programme of activity, to provide regulated investment services: receiving and transmitting orders, executing them, holding client assets, managing portfolios and giving personalised advice. The licence requires minimum capital and ongoing supervision. Finary obtained it on 31 March 2026, which is what allows it to launch a PEA and a brokerage account rather than only tracking accounts held elsewhere.
Large language model (LLM)
A large language model is a neural network trained on a very large corpus of text to predict the most likely continuation of a sequence of words. Products such as ChatGPT, Claude and Gemini add instruction-following, tool use and safety training on top. Because the underlying skill is fluent prediction rather than lookup or calculation, an LLM can produce confident, well-written text that is wrong, and it performs arithmetic poorly unless it is allowed to write and run code.
Livret A
The Livret A is held by most French households. Deposits up to €22,950 earn interest free of income tax and social contributions, and the money is available at any time. Since 2020 the rate is, in principle, the average of six-month inflation and the six-month average of the €STR overnight rate, rounded to the nearest tenth, with a floor of 0.5%; the government can depart from the formula on the Banque de France’s advice, as it did in 2023. The rate fell from 3.00% to 1.50% between February 2025 and February 2026 as inflation and ECB rates dropped, then rose to 1.70% on 1 August 2026. The LDDS follows the same rate; the LEP, for lower-income savers, is set at least half a point higher.
MiCA
MiCA (Regulation (EU) 2023/1114) is the European Union's framework for crypto-assets. It replaced national registration regimes such as France's PSAN with a single authorisation as a crypto-asset service provider (CASP), valid in all member states, with rules on custody, capital, conflicts of interest and marketing. Existing national registrations had a transition period ending in 2026. Finary obtained its CASP authorisation from the AMF in July 2026.
MiFID II
The second Markets in Financial Instruments Directive (2014/65/EU), applied since January 2018, is the core rulebook for investment firms in the European Union. It requires firms to assess whether a product is suitable for a client before advising on it, to disclose all costs, to record communications and to act honestly, fairly and professionally in the client's best interest. In May 2024 ESMA stated that these obligations apply “irrespective of the tools” a firm uses, including generative AI, and that hallucinated information can amount to misleading advice.
OAT-Bund spread
OAT (obligation assimilable du Trésor) is the French government bond; the Bund is its German equivalent, treated as the risk-free benchmark of the euro area. Their yield difference, the spread, measures how much extra investors charge France. It was around 50 basis points for most of the 2010s, jumped above 80 during the 2024 dissolution crisis, and widened again in 2026 as rating agencies downgraded France, the budget passed without a vote and interest costs rose. A wider spread raises the cost of every new French bond issue and, with a lag, French mortgage and corporate rates.
PEA
The PEA (plan d’épargne en actions) is a French investment account that can hold shares and funds of companies based in the European Union or European Economic Area. After five years, gains and dividends are exempt from income tax and only bear social contributions. Deposits are capped at €150,000 (plus €225,000 in the PEA-PME variant). It is the standard vehicle for French investors buying European ETFs, and the product Finary announced in March 2026 after obtaining its investment-firm licence.
Real yield
A nominal bond yield can be split into two parts: the inflation investors expect over the bond’s life and the real return they demand on top. Inflation-protected bonds, whose principal rises with the consumer price index, trade at a yield that is the real yield directly; the difference between a normal Treasury and a TIPS of the same maturity is the market’s inflation expectation, called the breakeven rate. In 2026 almost all of the rise in US yields came from real yields, which told analysts that markets expected tighter policy and demanded more compensation, not that they expected inflation to stay high for a decade.
SCPI
An SCPI pools investors' money to buy and manage commercial or residential property (offices, shops, clinics, warehouses) and distributes the net rental income, typically quarterly. Shares are not listed on an exchange, so they are valued periodically by the management company and can take weeks or months to sell. SCPIs are a common line in French portfolios and one of the asset types Finary tracks, usually through manual entry or a connection to the management company.
Screen scraping
Screen scraping is the technique of programmatically logging into a website with the user's credentials and extracting information from the pages, as opposed to calling an API designed for machines. Aggregators fall back on it when a bank or broker offers no open-banking interface for a given account type. It is fragile by nature: any change to the bank's website layout or login flow can break the connection until the aggregator updates its parser. This is the reason Finary staff gave in 2026 for recurring synchronisation failures.
Sycophancy
Sycophancy is the documented tendency of language-model assistants to tell users what they appear to want to hear: agreeing with a stated view, softening criticism, or changing a correct answer when the user pushes back. It arises from training on human feedback, where agreeable answers get more approval. A 2023 Anthropic study found it across five leading assistants, and in April 2025 OpenAI rolled back a ChatGPT update that had become noticeably sycophantic. For money questions it means that asking “is my plan reasonable?” invites validation, whereas asking “argue against my plan” invites the scrutiny you need.
Time-weighted return
The time-weighted return (TWR) chains together the returns of each sub-period between cash flows, so that adding or withdrawing money does not distort the figure. It is the standard for comparing a portfolio to an index or a fund manager. The money-weighted return (MWR, or internal rate of return) does the opposite: it includes the effect of when you invested, and so measures your personal outcome. Free tools such as Portfolio Performance compute both; Finary's official documentation describes only an unrealised profit-and-loss figure.
Unrealised gain
An unrealised gain (or loss) is the difference between what a position is worth now and what you paid for it, on positions you still hold. A realised gain is the same difference on positions you have sold. The distinction matters for two reasons: tax is generally due on realised gains only, and a tracker that shows unrealised gains alone, as Finary's documentation says it does, will not tell you how much you have actually made over the years once sales are included.