Sallie Krawcheck, founder and CEO of Ellevest is redefining investing for women and dismantling the myth that “investing is a man’s world”. Kim Parlee sits down with this Wall Street legend to discuss how to close the gender investing gap.
I want to start off. I mentioned your career. And I mean, there is a lot of people-- you started off as, I think, a Research Analyst, and moved to the upper echelons. And then when you left, you eventually started Ellevest. You didn't have to. I mean, I'm assuming you were probably compensated pretty well. You could've done a whole lot of things in terms of relaxing.
I was compensated better when Citigroup stock was in the 50s as opposed when it went to below one.
So yeah, it's still-- yeah, but that's not why I did it. I'm happy to be able to be doing something that's really very mission-driven. And when I sat back and said, what am I going to do next? Do I want to go back into a big company, with everything that entails, or do I-- is it most important to me to be mission-driven? Is most important to me to be innovative, to learn every day? And I really had the privilege of being able to sit back and say, what's important?
And at the end of the day, making an impact, making a difference, getting women to close all their money gaps, and therefore live better lives, was important to me. And we're fortunate to be in a world now where you can start businesses much more-- not easy, but much more easily than we could five and 10 years ago. Not inexpensive, but much more inexpensively than five and 10 years ago. And you can have an impact from a startup that you only used to be able to have from a big, big, massive, perhaps bureaucratic, company.
Let me ask you. It's not about empowering. It's about using the power we have, which very much exists. You've got a bunch of other myths that you have when it comes to women investing. I wouldn't mind going through a few of them.
Myth number one, women are not as good at math and mathlike things as men.
Oh, math is hard. Wasn't it a Barbie doll that said math is hard?
Well, that's not true. We females, we love males. Love males. I love to say I've been married to a couple of them. I think they're amazing, amazing. Get as good or better grades in math than the guys do. We get better grades in other things than the guys do. So the sense that-- and it's true with technology, too-- but math is not for girls is not right.
Men are better investors than women.
Yeah, that one's not true, either, I hate to tell you. Women are better hedge fund managers, mutual fund managers, and individual investors than men. You want to guess why?
We trade less, so we pay less in fees. And we even saw this at Ellevest, where I've always heard that women trade less, tend to panic less in downturns. But back earlier this year when the market cracked and was down a thousand-plus points, some of our competitors, their sites crashed. And our women just, it was fascinating. Our attrition rate-- now, some of it's how we built the product, that we tell, we send you a message if you're off track. So even if the market's down a thousand points, you're not getting the email, you're OK. But I don't think our volume went up, and our attrition rate certainly did not.
That is fascinating.
Women are too risk-averse to invest.
Yeah, this is another one. And we've been talking about this for years. And then, of course, somebody in the United States, one of the guy companies comes out and says, oh, we found out women aren't as more risk-averse. And we're like, yeah, we've been saying that for a while.
But what we see is that I like to say women are not more risk-averse. Women are more risk-aware. And what that means is that in order to make an investment, we want to understand what the downside is. And not standard deviation, and not drawdown risk, but how bad can it be? And, again, if the market goes down a thousand points, can I still retire on time? Can I still buy my home? We want to understand it in English and we want to understand the conceptualization around it as opposed to--
What it means to me.
--exactly. What will it mean in this portfolio? And so what we've done at Ellevest is you invest this amount of money. We give you advice on how much to continue to invest. We put you in an investment portfolio, and we show you not did you outperform or underperform the markets? Women don't care about that. But how much money you should have at a 50% probability, a 70% probability in x number of years, and a cone of how the money should grow over time. If you're in that cone, you're fine.
So when we do that, we have found that not only will women take on as much risk as men will, they're actually willing to take a bit more-- which we should, because we live longer than men do. And so using our longer lives as an asset for us in order to add on, perhaps, a bit more risk-- which in theory, will add on a bit more return-- can be a smart initiative. It's a smart thing to do.
- Something else you'd like to do, I know, is you play games with your audience. And I have heard it's like financial Jeopardy. So you give an answer, and you see if people know what the question you should be asking
Nobody ever gets it.
I didn't get these right. So the first one is six to eight years and 80%. What is that?
Yep. Six to eight years, I should be asking you these, actually. I have the answers right here is how much longer we women live the men do. And 80% is a percent of us women who die single. And you can see this. Go to any nursing home and you can see that the gentlemen who are there are the belles of the ball. I'm not sure if a man can be a belle. The Bills of the ball. It's the Bills of the ball.
Yeah. No, that's a great one. 2/3.
2/3, that's the percent of wealth that women retire with versus men's.
Oh. What you're asking me what sex is?
I really feel like your viewers probably know--
--what sex is.
But the correct Jeopardy answer in this case is the thing we women talk about more with our friends than money. And it's really fascinating, isn't it, that in the United States-- which we started with the Puritans. The pilgrims are Puritans. And yet you can read about money in all the popular women's magazines. You read about the six sex positions. We talk about it with our friends. We are more likely with a potential partner to have sex on the third date than we are to talk about money.
Can you imagine if you talked about money on a third date? There would not be a fourth date. But I've been married for a long time. I understand it is socially acceptable to have sex on a third date or second. I don't even know anymore.
We're delving into a whole new world of advice here.
Let me move off of this topic.
But it goes to show if you just step back and think about it, how much shame has been built up around money, and how we women have been told it is not an area that we should be comfortable in.
And I would challenge you, what is the amount of money that we make for our salary, our compensation, that we would not feel ashamed about? If we make more than our friends, we feel bad. You don't want to let them know, and you don't want them to feel bad, and don't want them jealous. But we don't make enough money for our parents, because they put it-- There's no amount of money that's the right amount of money.
And so somehow, our society has wrapped money in shame for women. And how do you know what raise to ask for if you're not allowed to talk about money? You don't.
I mean, there's so much-- each answer here, we could unpack into an hour of insight, I think, for people. But I want, for someone who's watching, and this is a new conversation for them. Like, they're doing OK. And what do they need? What do you want them to hear? What is the most important thing for them to hear, actually, to transform, to see more abundance in their life, and get things going?
I love that question. The research we've done at Ellevest tells us that first of all, the number one source of stress for women is money. The number one reason women leave their jobs is often not, oh, my boss is a jerk. It can be because of stress about money, and needing to find a better-paying job, or just, gosh, it's eating at me.
Conversely, the number one driver of women's confidence in their ability to achieve what they-- the big things they want to in life, it's not how much money they're making it work. It's not their relationship with their boss. It's not their level of education. It's whether they are investing and saving. It's actually, the third is how much they have built up.
But what's interesting it's the actual act of doing it, the proactive, I invested today. I have got x percent out of every paycheck that's being invested, and I can see it grow, or it went down a little bit with a bad market. But that actual act, proactive act of doing it is the number one driver of confidence.
Such a pleasure. Thank you so much.
Thank you for having me.
Sallie Krawcheck, the CEO and co-founder of Ellevest.