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Gender-Neutral Investing Is A Fallacy, And Ellevest Knows Why

When design defies stereotypes, success often follows.

Gender-Neutral Investing Is A Fallacy, And Ellevest Knows Why
[Photo: Estefany Molina]

Ellevest, the digital investment platform designed specifically for women, was initially conceived when Wall Street veteran Sallie Krawcheck had what she calls a “mascara moment.”

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“One morning I was putting on my mascara and I was like, ‘I am about to have a big thought,'” the CEO and cofounder of Ellevest told a group gathered at Ellevest headquarters in New York during The Fast Company Innovation Festival. “Then it came to me, boom: The retirement savings crisis is actually a women’s crisis.”

Sallie Krawcheck [Photo: Estefany Molina]
Women, she says, retire with two-thirds the money of men, and live six to eight years longer. (“Look at any nursing home: It’s 80% women,” she notes.) Thanks to pregnancies and child raising, they typically take more career breaks. There’s the gender pay gap, the gender debt gap, and women’s salaries statistically peak earlier. Factor all that in, and it means women need to make different investing decisions from men.

“‘Gender-neutral products’ are actually, by default, for men,” says Melissa Cullens, chief design officer, noting that 86% of investment advisers are men who think and invest, well, like men. Meanwhile, 73% of women are unhappy with the financial services industry, in spite of the fact that women control $5 trillion in investable assets. Gender-neutral investing tools fail women because they don’t account for differences in how much women earn, or when they earn it.

Melissa Cullens [Photo: Estefany Molina]
Krawcheck, Cullens, and Alexandria Stried, the chief product officer, set out to design a platform informed by the unique way women think about investing, one that “bakes in” gender differences like average lifespan to investing algorithms. Their team spent 200 hours interviewing women about their views on money and investing, and put 40 hours into ethnographic research. After 1,875 hours of design iteration, they had a minimum viable product.

Ellevest’s investing tools, for instance, realize that women’s salaries peak at 40, while men’s peak at 55. A retirement scenario calculated by Ellevest will show that a man and a woman, each earning $85,000 at age 30, will have remarkably different retirement savings. Because of the gender pay gap, the woman–even if she invests the same percentage of income as the man each year–will have $320,000 less when she retires at 67, and that money will last six years fewer than his would, even though she’ll likely live three to five years longer. Gender-neutral investing tools rarely take this into account.

[Photo: Estefany Molina]
Cullens said Ellevest’s research found that what women want in a financial platform is “the ultimate investing assistant, a holistic picture of their money, and an investing tool to reach goals” as they change over time, whether they are buying a house, splurging on a big vacation, paying for a child’s education, or retiring. The result is a platform that’s as easy and fun to use as picking out a dream Airbnb, while also getting your financial house in order.

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But as Ellevest prepared to come out of soft launch, they faced some discouraging pushback—from women. “We saw an interesting thing happen on Facebook when we put out our first ads,” says Krawcheck, the former CEO of both Merrill Lynch Wealth Management and Smith Barney. “Some women thought it was amazing, but other women got angry . . . at me.”

“Design for women” has too often meant “pink it and shrink it.” And the conversations on social media reflected that, Krawcheck said. The women who were upset said they didn’t want something dumbed down, or to be patronized or talked down to by an investment product “for women.”

[Photo: Estefany Molina]
“And then what would happen, which was fascinating, was that someone who had been on the site would say, ‘Actually, these guys have 22 ETFs, the other guys only have 17. And this thing about living longer is a big deal . . . that isn’t sexist, that’s feminist,'” Krawcheck recalls. “Sadly, of all the people who didn’t like it, everyone who was negative thought that ‘for women’ meant ‘dumber.’ There wasn’t a single person who said ‘for women’ meant that it must be smarter.”

Despite early pushback, Ellevest–whose site is, mercifully, pink-free–is clearly on to something. The company recently closed a $34.6 million funding round led by Rethink Impact, just launched one-on-one personal financial planning, and is dropping hints about other financial products and services.

“What we’re hearing from so many professional women is, ‘I’m confident in my personal life and paying my bills, but I haven’t been as confident in investing, and you’re making me feel more confident’,” Krawcheck says. “We have requests for credit cards, or people saying I trust you, I want your insurance.”

About the author

Erin Schulte is a writer and editor whose work has appeared in Fast Company, The Washington Post, The Wall Street Journal, Harper's Bazaar, and Entrepreneur, among other publications. You can find her on Twitter @erin719nyc.

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