Often when talking to students about investing, a student will ask: “Can’t I just hire someone to do this?” The answer is obviously “yes” and then I will launch into my “you better something about investing to know if they are doing a good job for you” speech. I realize that is only providing half the answer, because we better teach students the “hiring” part too, as in there are lots of different financial advisors with fancy titles that they can hire. They better know who is required to have your interests first (aka, a fiduciary) and those who may be putting their own interests first.

Here is a great graphic that shows an advisor hierarchy which students can refer back to at some point in the future when they need help with their finances: 

Questions for students:

• In your own words, what is a fiduciary? Here’s an entertaining video for you to review.
• Do you think it is important to know whether a financial advisor is a fiduciary? Why?
• What is a commission? How do salespeople earn one?
• Create a chart that lists each of the advisor types. Indicate the services they provide, whether they are fiduciaries and how they get paid.
• Which advisor do you think is right for you?

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About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.