Digital wealth platforms built by women for women are riding several megatrends. These include the digitalisation of finance, which has been accelerated by the pandemic, the growth of women’s wealth as well as the rise of mission-driven brands and sustainable investing, which is so important for women and millennials.
While financial services firms have launched several initiatives to ‘market to women’, the secret is to build a community, a brand, a product around women, believes Sallie Krawcheck, CEO and co-founder of Ellevest, the US-based robo-adviser investment platform built “primarily for women by women”.
“Women are underinvested, but this is not their fault,” says the former CEO of Merrill Lynch WM and US Trust. She co-founded the firm in 2014 with the mission of “getting more money in the hands of women”. Initially focused on advising women so they understand issues such as the real cost of a career break and how they can make that up, today the platform offers a subscription-based service which has expanded to investing, banking and coaching, serving more than 100,000 clients.
There are an increasing number of successful starts-ups founded by women to solve women’s problems, “which men have looked right past”, said Ms Krawcheck, speaking at a recent Deloitte event, giving examples such as Bumble the dating app, and the fashion service Rent the Runway. Personalisation is the next big trend, and technology is the enabler, she believes.
People tend to think that “money is gender neutral”, and financial firms state they serve everybody, but the numbers do not show that. Most clients of investment platforms are men, and even new age apps only have 20-30 per cent women users, reports Ms Krawcheck.
At Ellevest, women represent more than 90 per cent of clients. Trust is key to engaging with them, as it is important to speak to them taking into account their financial education, and “in small bits, not in big articles and books”, getting rid of the jargon, talking in a way that is “not patronising, but peer to peer, making it fun and engaging”. The firm does not require investment minimums, believed to be discriminatory for clients.
Ms Krawcheck also believes that ESG and impact investing are a way to “open the door” to women who would have not otherwise invested.
“Women are happiest in jobs and careers where they both make money and they understand what their purpose and mission is and the difference they are making, and the same is true in investments,” she says.
It is also crucial that women see themselves reflected in advisers.
Of the 100 plus people Ellevest employs, 75 per cent are women, close to 50 per cent are people of colour and more than 20 per cent are LGBTQIA (lesbian, gay, bisexual, transgender, queer and/or questioning). Ms Krawcheck’s recruiting strategy is not to fill a slot until she finds a person who adds to the cultural diversity of the organisation, as she firmly believes in the concept that “diversity is more powerful in driving performance than high IQ”.
Women-friendly
A similar winning mix of technology and sustainability is at the base of a new online platform, WeInvest, due to launch in October in France. The app aims to inform and encourage women to rate financial institutions, in a similar way TripAdvisor does for the hospitality industry, with a focus on “the easiness and female sensitivity.”
Technology can empower women if used in the right way, says Paloma Castro Martínez, co-founder of WeInvest. Her colleague co-founders are Michael O'Sullivan, author of “The Levelling” and former head of international wealth management at Credit Suisse, and Martin Wittenberg, managing partner at strategic communication firm Euros / Agency.
For a long time, women, individually and collectively, have not had a voice in the financial industry and the investment world, says Ms Castro. Digitalisation, through an app, can help address this issue “by amplifying the views of women vis a vis financial intermediaries, advisers and investment products”.
The WeInvest rating aims to create a transparent “eco-friendly” rating system for financial intermediaries and advisers, in line with ESG (environmental, social and governance) characteristics but with the addition of an “F” factor. Through that, users will evaluate to what extent banks, institutions, financial advisers and investment products are women-friendly.
“There is relatively less data on the investment behaviour of women, and we hope to rectify this by publishing indicators on female investment behaviour,” says Ms Castro, explaining that the platform also allows women to discuss investment topics with other women, in a virtual forum.
“Gender investment inequality is only just coming onto the radar screen of policy-makers, and the female demographic is still inadequately served by the financial industry. Our aim is simply to get women to invest more, and better.”
