Sallie Krawcheck thinks she can serve women investors better than Wall Street can, and she can do it with a robo designed specifically to account for women's concerns in its plans.
Krawcheck unveiled Ellevest, a digital investment platform for women and the latest of her female-oriented ventures, on Wednesday. It is separate from the Ellevate Network, a women’s professional organization she founded and remains chair of.
The mobile-first platform aims to give women a goal-based investing experience. Krawcheck said women don't invest to the same extent as men and she wanted to do something address the gender investing gap.
“With my background — and recognizing this gap — if I don’t, shame on me,” Krawcheck said in an interview about the founding of Ellevest. The former Bank of America and Citigroup executive will serve as the startup's chief executive.
Ellevest will provide its clients with an interactive financial plan that takes into consideration factors such as the gender pay gap, earnings power over time, risk preferences, women’s longer lifespans and caretaking responsibilities.
Women generally earn less than men and their salaries peak earlier than men’s, Krawcheck says. Also, women may have a different take on risk than men do, she says. “A lot of people say women are more risk-averse, I say they’re more risk-aware.”
Ellevest charges an annual 0.5% fee on assets under management. The client can start small, Krawcheck said. There’s no required minimum dollar amount per month to maintain.
The digital adviser shows clients how they’re progressing toward their goals and notifies them if they veer off course with advice for how to get back. The focus in on reaching goals, not outperforming the market.
“We don’t judge her investing performance against the S&P,” Krawcheck said. “Just to compare it — as the industry does — versus the S&P is exactly the wrong comparison.”
The immediate reaction to Ellevest's launch was positive on social media.
The wealth management industry at large, however, will take a wait-and-see attitude toward the effort.
"There are dozens of players in the automated investing space; now how do they stand out, and differentiate themselves? Ellevest is a live experiment in whether or not it can be successful as a niche marketing play," says Bill Winterberg, founder of FPPad.com.
Winterberg says it would be a mistake to underestimate Krawcheck's brand and ability to funnel users to the new platform.
"The industry gets bad marks across the board for not being properly positioned for women investors of all kinds and needs. This is refreshing and I do it see it as filling a need unserved by the industry."
QuoteThe industry gets bad marks across the board for not being properly positioned for women investors of all kinds and needs.
Ellevest is not the only robo targeting women investors. Other platforms include WorthFM and SheCapital.
Ellevest closed a $10 million funding round in September led by Morningstar in which MasterCard CEO Ajay Banga, Allianz SE chief economic adviser Mohamed El-Erian and Depository Trust & Clearing Chairman Robert Druskin also participated.
Krawcheck noted in a recent blog that the Ellevest platform cost $2 million to build. According to its latest ADV filing at the end of March, a pre-launch Ellevest had 40 accounts with just over $136,000.
Krawcheck is also chair of Pax Ellevate Global Women's Index Fund, which invests in companies that have female directors and top managers.