Ask: “Are You a Fiduciary?”

Fiduciaries are legally obligated to act in their clients’ best interests, putting their clients’ interests ahead of their own. They must try to avoid misleading clients and disclose material facts to clients and prospective clients.

How To Make It Happen

Fiduciaries must disclose conflicts of interest

…Such as how and where they receive compensation for selling you certain products that they have an interest in. It also means a fiduciary must offer you suitable investments, appropriate for your risk-capacity, and financial goals.

What’s not a fiduciary…

In your investing quest, you may also encounter broker-dealers. Broker-dealers may also be called “financial advisors,” but they are not investment advisors or fiduciaries. They are not legally obligated to tell you when they have an interest in the security they are recommending for you.

When working with a broker-dealer (financial advisor), it’s important to understand what service you are buying. The New York Times recently published a fantastic set of questions to ask.

See How It’s Done

Meet Maria

35-year-old new mom who plans to keep killing it in her career.

Maria makes $125,000 as an account director at an ad agency. She’s coming off maternity leave and thinking forward to summer camp, private school, and potentially expensive hobbies in her kid’s future.

Disclosure: For illustrative purposes only. This is a hypothetical client scenario and does not represent any Ellevest client or confer individually tailored investment advice.

  • Kids Are Awesome

    $75,000 for summer camps, sports, music lessons and other incidentals

She’s a stickler for research, but short on time.

  • Get investment advice from a fiduciary to save some effort and research time for building a relationship.
  • Put $31,000 in a “Kids Are Awesome” goal
  • Contribute $520 each month
  • Reach a goal of about $75,000 in six years