Sally Kravcek, CEO and co-founder of Ellevest and author of “Own It: The Power of Women at Work”.
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Sally Kravcek knows what it’s like to be one of the few women in the room.
She led the capital management business of a large Wall Street firm, Merrill Lynch, before becoming co-founder and CEO of a venture finance technology company – roles that women have not traditionally held.
Her company Ellevest is focused primarily on helping women invest.
Since its founding in 2014, the company has sought to create a customer base of investors, not traders. According to Kravcek, the company has done so successfully, with high recurring deposits and a net inflow into its digital business every week this year.
Krowcek admits that the company’s chances of reaching the place where it is today were great. As other competitors dropped out, it brought Ellevest closer to its goal of becoming an “investment platform № 1 for women,” she said.
Krawcheck is focused on helping women do the same with their money – outweigh the odds against them – so they can achieve financial security.
CNBC.com recently caught up with Krawcheck on the development of Ellevest to date and on how women can better build wealth.
(Editor’s note: this interview has been abbreviated and edited for clarity.)
Lori Konish: You used to head the capital management business of a large firm on Wall Street, which is predominantly male, and then founded this investment platform for women. What inspired you to do this?
Sally Kravcek: I would be ashamed if I didn’t, given the experience I’ve had and the recognition that women just haven’t invested as much as men. It was rejected: “Oh, they just aren’t risk tolerant.
Don’t go out and at least try to create something for women to help them close the gender gap in investment, the gender gap in wealth, help them make more money, help them live more lives, help them quit the job they hate, help leave them relationships that are harmful to them, work on big platforms and manage them – I’m ashamed if I didn’t see the problem, went out and built something like Ellevest.
LK: What can Ellevest do for women differently than other investment platforms?
SC: We didn’t launch until the end of 2016, almost two years after we started. She conducted in-depth research on what could attract her to invest and what was lacking. And there were things we found needed. For example, gender recognition in our investment algorithm may not be for the reasons you think.
The reason is that she lives longer. She earns less. She is making more career breaks. Her salary reaches a peak faster. If you think she’s average, you can assume she’s making too much money and she’s dying sooner, which means she may run out of money.
LK: What surprised you in female investors when you created the platform?
SC: They are not against risk. In some cases, they will take more risks than men, and should, because if they live longer, they have the opportunity to go at greater risk. Women are aware of the risk, so you need to explain to them what that risk really means. “Am I going to my goal? I see the market has just gone down. Am I still going to my goal? If not, what do I need to do?”
On the Ellevest platform, we show how they track people within the parameters of expectations, do they achieve the goal?
LK: Did the Covid-19 pandemic shed light on these issues?
SC: My God, in many ways – like the election of Donald Trump, as well as some steps in different states to limit the right to choose. All of these things for women helped them understand that the Magic Prince probably isn’t riding a white horse. The Magic Prince is a government with social safety nets, etc. Women have lost a lot of position in the pandemic, so it’s hard to ignore that at this stage.
LK: You talked about “retreating” during the Covid-19 pandemic. Are we still in it?
SC: There are months when things are going better. More women returned to work. But I think the consequences are long-term, even for those women who have been forced to leave the workforce and possibly returned. They will never return these salaries. They will never get back the amount of that income. They will never receive 401 (k) contributions and social security that they did not.
Wealth is growing. Lack of wealth, debt is also growing. Women did not invest as much as men, so they did not have a positive effect from the mix. And they had more debt than men, especially credit card debt and student loans, so they had a negative effect.
LK: What steps can women take to heal?
SC: One step is to recognize all the negative messages she bypasses the money and does not buy on them. There is a study that says 72% of money articles or media for men are very positive. Wealth growth, trade, investment, bitcoin, stock memes. One can argue whether this is true, but it is wealth.
Reports to women are usually scarce, no matter what it’s all about budgeting and earning a dollar. Or is it “don’t be so frivolous”. It’s “if you can just highlight the coupon, you’ll be able to get out of it.” While men feel empowered when it comes to money, women feel disenfranchised and feel lacking and ashamed.
There is no amount of money that women earn that they are not ashamed of, not ashamed of. You just have to throw it away. And old women will not buy a house, because they think that if they do not, they will be a more attractive prospect of marriage. This is poisonous, misogynistic nonsense. And we must reject it.
LK: A lot of advice for women is about asking for a raise and starting to invest. Where does this go beyond that?
SC: Absolutely everyone should ask for a raise. And if over time you don’t get a raise and you see that raise people who represent the majority and not you, you can ask for another job. I understand it’s out of place privileges, but if you can. From there, it goes to repaying your debt with a high interest rate, to investing in your 401 (k) to get matching, if it exists, to creating an emergency fund, and then investing in a diversified investment portfolio with someone like Ellevest.
It doesn’t have to be more complicated than that. It doesn’t have to be your full-time hobby. If you do these things and set aside 20% of your salary for these things, over time it has shown historically that you can survive the economic ups and downs we normally observe.
LK: How can the men in these women’s lives help them advance?
SC: It’s funny because when we launched Ellevest, we were pushed away from the traditional industry. We received a letter of hatred from some of my friends from Wall Street. Over time, it happens that their daughters start to age at their first job, first, they send me their resumes, and second, they say, “You know what? As I watch the challenges my daughter faces, I realize I need Ellevest. She comes home from work and says her boss picks up all the guys and takes them all to play golf. When I look through my daughter’s eyes, I “I see monetary inequality”.
It is important for dads to know that their relationship with their daughter is definitely one of the most important in her life. And there are even studies showing that this is the starting point for her confidence in business. So when she is confronted with this gender nonsense, she says, “Yes, but my dad believes in me,” and it builds up a lot of confidence.
LK: What advice would you give to young women investors who are just starting out?
SC: The best day to invest was yesterday. If you didn’t do it yesterday, the next best day to invest is today. I don’t think any of us properly comprehend the power of connection. It’s kind of a tricky thing to explain, making a profit and then returning on return and returning on return. If you can start investing even small amounts early and allow them to grow through the ups and downs of the market and so on, you have historically been pleasantly surprised at what the growth of that money has been like.
I think just start with everything you can and consider yourself an investor. And no need to press. There’s something like, “Are you into bitcoins? Are you into all this stuff?” If you want, great, but it’s a bargain. And make sure it’s money you can lose, and treat it that way. Going to the bank because you think you need to bet is not good. You could perfectly predict that cars would take over our streets and the world and still lose a lot of money by betting on it because there were so many car companies and then many of them perished. Everything the bulls say can come true. You can still lose everything.
LK: A lot of people on the one hand or on the other when it comes to bitcoins and cryptocurrencies. Do you have a look at this?
SC: Can I be in the middle? The idea of creating a world currency is appealing. For so long it has been gold that has its limitations. But I don’t know which fragrance will win and how widespread it will be. But there is something there, of course.