Ellevest, the investment firm founded and directed by Sallie Krawcheck, invests on behalf of its clients in a range of private investments, including women-led venture funds, providing working capital to women-owned businesses and affordable rental housing for women.
This is “the best kept secret in the industry,” Ellevest CEO Krawcheck told ThinkAdvisor in an interview. “Nobody knows about it. But we do… It’s tangible dollars for a woman to have working capital for her business.”
Ellevest’s overall mission is to put more money in the hands of women.
Founded in 2016 as a robo-advisor, the company now also offers the services of Human Private Wealth Advisors to investors with a minimum account size of $1 million.
Krawcheck describes the level of investment by the company’s customers as “a continuum.”
By default, Ellevest keeps roaring ahead. Despite last year’s tough stock market, the company had a record $1.5 billion in assets under management (she explains why in the interview). Today, the company manages $1.6 billion in assets.
Last April, Ellevest raised $53 million in a Series B funding round. This included investments from several new women-led investors such as Envestnet and New York Ventures of Empire State Development.
Returning investors include Melinda French Gates’ Pivotal Ventures, Morningstar, PayPal Ventures and Allianz Life Insurance Co. of North America.
Krawcheck, formerly President of Wealth Management at Bank of America and CEO of Smith Barney of Citigroup, struck out on her own in 2013 when she bought professional women’s organization 85 Broads and renamed it Ellevate Network.
She wanted to advocate the power of diversity to prevent another financial crisis.
She recently sold Ellevate back to its original team.
What sets Ellevest apart the most is that the majority of the investments are designed to support women, says Krawcheck in an interview.
“We focus on people who are underserved,” she notes.
The firm managed the Pax Ellevate Global Women’s Leadership Fund [now Impax]invests in top companies that promote women leaders.
In 2019, Krawcheck resigned as chairman of the mutual fund and no longer has any involvement in it.
She began her career as a research analyst and rose to CEO at Sanford C. Bernstein before joining Smith Barney.
The financial services industry’s failure to promote more women to senior positions she openly blames on “bias”.
Meanwhile, in the US, women in general are disproportionately losing financial ground, argues Krawcheck.
In fact, the Ellevest Women’s Financial Health Index, launched in September 2022, showed a score of just 1.1 out of 10 in December 2022, matching its previous “low point” reading, according to Ellevest.
“Women haven’t progressed as much as we would have all guessed 10 years ago,” says Krawcheck.
“I didn’t expect to see how tough it is for women today. Inflation – if you are less wealthy [than men] what women are, it hurts more – and the curtailment of reproductive rights, a financial and economic problem, has been significant [challenges] for women this year,” she says.
ThinkAdvisor recently interviewed Krawcheck over the phone. She was speaking from her office in Manhattan.
Noting that Ellevest is trying to attract clients to invest in environmental, social and governance areas, she said she has been very skeptical about investing with impact for years.
“But now I’m fully bought,” she claims. “I don’t think you have to sacrifice a financial return to make a positive impact.”
Here are the highlights of our interview.
THINKADVISOR: What’s new at Ellevest?
SALLIE KRAWCHECK: The private investments we make are the industry’s best kept secret. Nobody knows about it – but we do it.
Tell me more.
Our investment team invests a lot of time in private investments: manpower [affordable] Apartments rented out to women and families in transition – really solid investments like this.
We invest in female-led venture funds, which in turn invest in female-led startups. It invests in healthtech, i.e. health care for women. It’s tangible dollars for a woman to have working capital for her business. We built that. It’s more tangible than buying a stock.
There was a lot of heartache and trouble in the stock market last year, but your company had record net worth of $1.5 billion. What are your assets under management now and to what do you attribute your outstanding performance in 2022?
We have $1.6 billion in AUM.
A driver of growth for us over the past year and overcoming the negative impact of the market is that two-thirds of our clients have set up recurring deposits to take advantage of dollar averaging.
Another reason is that women tend to weather market downturns better than men. Research has always shown that.
And it didn’t hurt that we have a number of private investments that we make for clients in order to generate a sizeable return, make a positive impact and be good diversification.
They did their job last year.
What is your forecast for the economy and the stock market?
The bond market tells us that there will be a recession.
But I do know that regardless of my predictions for the economy, the stock market will recover before the economy does.
In fact, the stock market is recovering decisively [better] when the economy is still uncertain because it’s a discounting mechanism that takes so much more bottom-up input into account than top-down input [factors].
Your business is constantly expanding with different types of offers. What are your five and ten year plans?
The market we are addressing is huge, so we have big plans in that regard.
But some things are beyond our control. One of them is what the market is doing and the funding that is available for the company.
Any new products on the way?