Sallie Krawcheck Leads Ellevest To A Landmark $1 Billion In Assets Under Management
Sallie Krawcheck has not forgotten what the skeptics said about Ellevest, her women’s-focused investment platform, before the service even launched. “It was like, ‘This is gonna fail; other people have tried and failed,’” she recalls. “And also, ‘What is for women anyway? That’s sort of dumb!’”
Five and a half years later, Krawcheck can finally mock these slights. She lets out a whoop and raises her hands above her head as she tells Forbes, exclusively and in a video chat, about the milestone Ellevest just hit: $1 billion in assets under management.
“It actually has been compounding, as you sort of expect assets under management to do, where the first $10 million took forever, the second $10 million takes less, and so on,” Krawcheck, who is also Ellevest’s CEO, says. She acknowledges that the service more than doubled its assets under management (AUM) in 2020 but says this was not entirely the result of a rebounding market boosting the value of users’ portfolios—instead, it came from clients consistently shuffling money into their Ellevest accounts.
“What I’m particularly proud of is that it happened during a pandemic. And very importantly, that at a time when you would think women would be more pulled back, we actually had net positive inflows every single week of the year,” she says. Money wasn’t necessarily flooding in—and in fact, Ellevest’s own data shows that as the so-called she-cession has taken hold, average monthly deposits have decreased from $740 to $474—but it was still coming in, not going out. This is especially notable, given how the rest of Wall Street was performing last year: According to Morningstar, U.S. equity funds posted $241 billion in outflows in 2020, which is more than the four next-worst years combined (2015, 2011, 2009 and 2020).
Ellevest has 123,000 clients with an average account size of $8,000. While the typical user is a woman in her 30s who is also saving money in a 401(k) at work, Krawcheck notes that Ellevest has investors ranging from 18 to 106 years old. A small portion of the business also focuses on higher-net-worth clients; a “triple digit” number of accounts hold $1 million or more, which is a demographic Krawcheck did not originally intend to address with Ellevest, but the events of recent years changed her mind.
“With #MeToo, we got enough demand for it,” she says, explaining that a turning point came when a wealthy woman told her, “‘Look, I’m tired of supporting the companies and institutions that haven’t supported me. And I don’t want to have my money managed by any company I wouldn’t let my daughter work at.’ And I’m, like, well . . . done.”
Carving out a place for higher-net-worth investors isn’t the only change Krawcheck has made to Ellevest in recent years. A longtime Wall Street executive—for more than a decade, she ran Sanford C. Bernstein, Smith Barney, Citi Wealth Management and Merrill Lynch—she’s building Ellevest into something more holistic than a straight investing solution: Over the last year she added a savings account and debit card product to Ellevest’s offerings, along with “a really significant array” of coaching services including certified financial planners, executive coaches and money coaches.
The executive coaches came directly from user feedback: “When you survey women about what they want from a financial company, the number one thing they say is, ‘I want to earn more money at work,’” Krawcheck says. “And then the whole industry ignores them.”
She also switched up Ellevest’s fee structure after listening to customers: the 0.5% management fee, which had existed since the firm’s inception, was replaced last summer with three flat-rate membership options. Customers can pay $1, $5 or $9 a month (there are discounts if you purchase on an annual basis).
Ellevest was founded on the idea of being female-focused—externally as well as internally, with 75% of Ellevest employees identifying as female (50% are people of color, Krawcheck says) and an engineering team that is two thirds female—and this lens makes the company’s $1 billion in AUM all the more notable. But in many ways, it’s because of this lens—and not in spite of it—that Ellevest is growing.
Traditional investing algorithms “shortchange women,” Krawcheck explains, because they don’t take into account that women live longer than men or that their salaries peak sooner than men’s. Ellevest’s algorithm not only takes these factors into account, but it’s been built around these considerations—which Krawcheck equates to how Bumble was inspired by women’s dating concerns and even Goop was founded around female health desires.
“There are some number of these [types of companies], and we’re one of them, where, I guess it’s not surprising, this didn’t come along before because the industry is so, so male and making so much money,” she says.
With $1 billion under Ellevest’s belt—and $92 million in funding, though it is not yet profitable—what’s next?
“$2 billion, $3 billion, $4 billion, $5 billion, world domination?” she winks. It’s a joke—but this time, Krawcheck is the one laughing.
Forbes posted this here: https://www.forbes.com/sites/maggiemcgrath/2021/03/23/sallie-krawcheck-grows-ellevest-to-1-billion-in-assets-under-management/?sh=5b85493a2395