Ellevest

Magazine

Ellevest is a Fiduciary. Here’s Why That Matters.

By Neshie Tiwari

At Ellevest, our number-one goal is helping you accomplish your money goals. It’s that simple. This isn’t something we say because it sounds nice; we say it because we’re a fiduciary.

Ellevest is a Fiduciary. Here’s Why That Matters.

What does it mean to be a fiduciary?

It means that, as an SEC-registered investment advisor (granted, a pretty unique one), Ellevest is obligated to act in your best interests.

You might think that anyone in the financial industry (advisors, brokers, insurers) would automatically look out for their clients’ interests first. But not everyone follows the same standards when it comes to providing investment advice. Registered investment advisors (RIAs) and fiduciaries like Ellevest have a duty to put your needs first — always.

It also means we’ve created policies and procedures to help us be transparent while making sure we’re following the Advisers Act — the law that defines what an investment advisor is and outlines what investment advisors are supposed to do.

And it means that we’ve always been held to a higher standard. Here’s how we’re putting your interests first every single day.

We keep your stuff safe

Ellevest doesn’t actually buy and sell the investments (in our case, mostly ETFs) in our clients’ portfolios — we’re here to focus on offering you the best investment advice possible. For the actual buying and selling part, we work with broker-dealer and custodian Folio. They follow our instructions to buy and sell the securities in your investment plan and then help to safeguard these assets once they’re in your portfolio. Folio also keeps your money and investments secure with insurance against their own company’s failure through two organizations: the Securities Investor Protection Corporation (SIPC) and Lloyd’s of London.

Also? We don’t play around with security when it comes to your personal information. Kind of important.

We’re transparent with you

You may have seen our disclosures. They appear everywhere from our Form ADV to our Magazine articles (seriously, check the bottom of this article) to your account statements. We add them in to make sure you’re getting the full and accurate picture of our services and projections at all times.

We’re straightforward about what we do for you and what it costs. And we keep records like your grandma keeps photo albums, so we can show that we’re constantly working to have your best interests in mind.

Know what you’re paying for

We believe you should know exactly what services you’re getting for the fees you pay.

As an Ellevest client, you’re paying for investment advice specifically aimed at helping you to get you to your goal amount (or more) in 70% of market scenarios. We do this by building your recommended personalized investment portfolios, determining how much risk is right for each of your goals, and selecting the right investments to help get you there.

You’re also paying us to monitor your investments daily — and to rebalance your portfolio if (when) necessary in order to make sure you’re staying on track. We’ll let you know if you fall off track from reaching your goals so you can take the necessary steps to fix it. And we reinvest your dividend payments for you.

Risk management is part of the package, too; we make your portfolio more conservative as you near your goal date because we want to help increase your chances of reaching that goal.

If you’re an Ellevest Premium client, you’re also paying for one-on-one financial guidance from our team of CFP® Professionals and career coaching with our team of Executive Coaches.

Here’s what you never pay for, by the way: your personalized investment plan. We give you a completely free investment plan that offers recommendations on how much you should aim for with each of your goals, and how much we think you should deposit into your Ellevest accounts to get there (and show you how much you have invested in which types of assets for your Ellevest accounts and any non-Ellevest accounts you already have).

And unlike with some other investment advisors, including certain digital advisors, you’ll also never pay for us to earn commissions or rebates on certain investments. We also don’t offer our own funds (which would actually earn us more money) like certain broker-dealers do. So you can be confident that when we recommend investments, we’re not doing it to pad our bottom line. We’re recommending them because we genuinely believe that specific combination of funds will give you the best shot at reaching your goals (or better).

Know how much you’re paying

Nobody likes hidden fees. And nobody likes overly complicated fee structures, either. How could you trust your money to someone who isn’t transparent about how much it may end up costing you to use their services?

So we’re up front about the fees we charge at Ellevest: 0.25% of the assets we manage for you if you’re an Ellevest Digital client, and .50% if you’re an Ellevest Premium client. So if you had $5,000 in your account, you’d pay $12.50 a year for Ellevest Digital. (We don’t charge anything for emergency funds, though. That wouldn’t be right.)

The funds you invest in themselves also charge management fees. We primarily invest in low-cost ETFs with management fees that range from 0.04% to 0.19%.

By the way, some of the funds in our Ellevest Impact Portfolios — which let you invest part of your portfolio in companies that positively support women — might have higher management fees than the ones in our “core” portfolios. That’s because those funds are more specialized, so it takes more time and effort for the companies that run them to monitor and maintain them.

If you’re a Private Wealth Management client, how much you pay will depend more on how much you have invested with Ellevest. Your financial advisor can help walk you through this info.

We’re built with your goals in mind

We’re also up front about how we manage your investment portfolios and how we calculate our projections so that you can feel good about the advice we’re giving you.

We start by getting personal. When you sign up with Ellevest, you give us some info about yourself and your financial situation, tell us about your financial goals, and then let us know how you’d like to prioritize those goals. We use all of that information to create a personalized investment plan — how much you should invest and what we’d invest it in — tailored to your specific needs.

Then we show you forecasts — how much we think that plan could get you, and by when — built with smart data models designed to reflect historical market behavior. That includes downturns — in fact, we build more downturns into our forecasts than some other advisers do.* (No one likes downturns, but they happen.) So we’re conservative about our forecasts. We believe that being more conservative is in your best interests.

Ellevest has been a fiduciary since the beginning. We’re not interested in building the best investment portfolio for Ellevest; we’re building the best investment portfolio for you. And we’re constantly examining how we can do things better.


Disclosures

*Review of the investment methodologies of Wealthfront, SigFig, Vanguard, and FutureAdvisor indicate the use of Modern Portfolio Theory (“MPT”) and Mean Variance Optimization (“MVO”). The basic assumption of MPT and MVO is that returns are normally distributed and very poor markets occur once every 1,000 instances. The Ellevest model assumes it happens 10 times for every 1,000 instances.

© 2019 Ellevest, Inc. All Rights Reserved.

*Review of the investment methodologies of Wealthfront, SigFig, Vanguard, and FutureAdvisor indicate the use of Modern Portfolio Theory (“MPT”) and Mean Variance Optimization (“MVO”). The basic assumption of MPT and MVO is that returns are normally distributed and very poor markets occur once every 1,000 instances. The Ellevest model assumes it happens 10 times for every 1,000 instances.

Information was obtained from third party sources, which we believe to be reliable but not guaranteed for accuracy or completeness.

The information provided should not be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice.

The information provided does not take into account the specific objectives, financial situation or particular needs of any specific person.

Diversification does not ensure a profit or protect against a loss in a declining market. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.

Forecasts or projections of investment outcomes in investment plans are estimates only, based upon numerous assumptions about future capital markets returns and economic factors. As estimates, they are imprecise and hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.

Investing entails risk including the possible loss of principal and there is no assurance that the investment will provide positive performance over any period of time.

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Neshie Tiwari

Neshie is the chief compliance officer at Ellevest. She helps our entire team to identify and mitigate risks and comply with all the rules that apply to our work.