Ellevest’s success comes from a shared belief that “nothing bad when women have money.” The company demonstrates a proven path for fintech startups: capture a swath of the consumer population, know your market, and serve it with purpose, products, and little bit of humor.
Krawcheck served as chief financial officer at Citi and Merrill Lynch, and was a research analyst on Wall Street. As an analyst, she lived by the contrarian philosophy of seeking alternative insights when the most investors adopted an “everybody knows” mindset.
But the math guides Krawcheck’s wisdom. In focusing on women investors, Ellevest targets 51% of the market.
“If you’re talking to everybody are you talking to anybody?” she asks. “The savings retirement shortfall—some would call it a crisis—is a gender issue.”
Also, 98% of divorcees and widows advise other women to learn how to manage their finances.
“If there’s not enough money to fund retirement, then ultimately it’s a woman’s issue,” Krawcheck says.
At the same time, she notes, women approach investing from a different cognitive perspective than men. Women tend to be more goal oriented in their investment strategy, while men are more apt to take a “beat the market” approach.
The notion that women are risk averse isn’t accurate either, Krawcheck says. She thinks a better description is risk aware. “Women just want to know the risks they face in their investments.”
Ellevest’s fee structure is dollar-based rather than a percentage rate, allowing the company to decrease customer acquisition costs and boost its bottom line.
She says credit unions have a similar opportunity because members trust them.
“You have an amazing opportunity because you have consumer trust and the fintech competition isn’t focused on you,” Krawcheck says.