Wall Street veteran Sallie Krawcheck is the co-founder and CEO of Ellevest, a digital investment platform for women that has raised $44.6 million in funding. Ellevest’s goal is to work to close the gender investing gap. The AI-powered platform tailors investments to the realities of women’s careers: they face a gender pay gap, they live longer, and their salaries peak earlier than men’s, so they need to save for retirement differently. Krawcheck, a speaker at the Slush conference in Helsinki, recently spoke to The Innovator.
Q: You’ve said you view finance as the final frontier and the fourth wave of feminism. Why do you hold that point of view?
SK: Money is power in capitalism and men have more money than women do. My opinion, and the opinion of many of the women I talk to, is that to be equal with men you need to be financially equal with men. The first step is to be in financial control, which doesn’t mean being independently wealthy. It means being able to stand on your own two feet financially so that you are free to leave a bad job or a bad relationship and start your own business and live your dream. It is crucial but in the U.S. mothers have told their daughters that talking about money is crass, unattractive and tacky so it is not part of our vocabulary, we don’t know how to invest, we don’t talk about it with our friends. That is why I launched Ellevest, to break these taboos so that women can earn the market returns men have earned all along.
Q: What else is holding women back?
SK: When I was at Merrill Lynch we did research that showed that women need more financial education. Somehow we are deficit in this area but so are the guys. The difference is men will invest in products they don’t understand and women will not. You can think “silly men,” but the real challenge is that historically men have earned the returns and women have kept more of their money in cash and this has added to the gender investing gap, which costs women as much as the gender pay gap.
Q: How does Ellevest aim to close the gap?
SK: Our investing and planning program is solely focused on her, meaning we do things that take into account women’s longer lives, the fact that women earn less and take more career breaks. All of these things are very important when you put together an investing plan for retirement, but some 86% of financial advisors are male so, without meaning to implicitly, they have made it into a business aimed at men. For example, the entire industry is built for people who want to outperform the market. The percent of women who want to outperform the market is zero. What they do want is to reach their goals. Our technology can do very powerful calculations based on how much she makes, what she wants to achieve and what her assets are.
Q: How many women are using the Ellevest platform?
SK: In one year we have built a community of 100,000 women and we have in excess of 6,000 clients. I see this as a huge growth opportunity.
Q: You recently raised a new $34.5 million round of financing. How will you use the funding?
SK: We are adding financial advisors and planners. Our clients are really asking for that. They want a personal touch as well as the digital experience.
Q: What should the financial industry as a whole do to help close the gender gap?
SK: Send female clients to Ellevest.