Sallie Krawcheck, one of the most influential women on Wall Street, doesn’t like to talk about herself. She’d rather tell you about the barriers women face to investing than how she got her own start.
Krawcheck is CEO and co-founder of Ellevest, a digital investment advisor designed specifically for women, a move that followed a progressive career in the male-dominated financial industry.
“Ellevest was really the first (platform) that worked to change the underlying product as opposed to just trying to exhort and cajole women to themselves change,” Krawcheck says.
While Wall Street was busy trying to force women to align their preferences with the male-centric investment platforms already on offer, Krawcheck turned the problem on its head by giving women a platform targeted to their life paths and goals.
It was revolutionary. Here was this woman on Wall Street, already an anomaly in herself, proposing making fundamental changes to the way things had always been done to benefit people who were largely viewed as second-class citizens by investment firms.
Today, women are not only investing more with Ellevest, they’re also staying invested more. When volatility rocked the stock market in 2018 and sparked influxes of panic-selling that caused other robo advisors to crash, Ellevest saw very little uptick in trading volume. Krawcheck hypothesizes this was due partly to women being less active traders to begin with but also because they trusted the Ellevest approach.
Born to a former member of the South Carolina House of Representatives, Krawcheck didn’t grow up wanting to work in financial services. She wanted to be a princess, naturally. When that wasn’t an option, she majored in journalism and mass communication at the University of North Carolina where she was inducted into the university’s highest honorary society, the Order of the Golden Fleece. It only took one summer working for Time magazine, however, for Krawcheck to realize she was better suited to Wall Street than journalism.
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Why women aren’t investing. This trailblazer says part of the reason women don’t invest is that no one talks to women and girls about investing. Women today are more likely to talk about sex than money, Krawcheck says. You can’t become comfortable doing something if you’re afraid to talk about it.
Society has deemed money and math unladylike, something Krawcheck is determined her daughter won’t feel. She wants her daughter to grow up knowing finance is as much a woman’s realm as it is a man’s.
“I let her see me checking my investment statements, paying bills, talking to my husband about money and the will,” Krawcheck says. “So she sees it as a natural, unremarked upon part of our family” to have both parents engaged in financial planning.
This is a stark contrast to what it was like for Krawcheck growing up. “The only interaction around money I saw was my parents arguing,” she says.
Becoming the seventh most powerful woman in the world. Krawcheck has collected career accolades the way others collect Cracker Jack prizes. Throughout her career, she’s been called one of the top 10 up and coming entrepreneurs by Entrepreneur Magazine and the seventh most powerful woman in the world by Forbes. Fortune Magazine featured her on their 2002 cover alongside the title “In Search of the Last Honest Analyst.”
And honest Krawcheck is. She favors the saying, “Sunshine is the best disinfectant,” and won’t pretend things are rosy if they aren’t. She calls it as she sees it, even if exposing the darker reality means putting her job at risk, as it did when she was a research analyst for Sanford C. Bernstein & Co. in the 90s.
Krawcheck stood out from the analyst pack for her boldly bearish reports. Less than 1 percent of reports were sell recommendations at the time but her first-ever equity research report, titled “Whoa Nelly,” exposed the credit deterioration of American General, a then-popular subprime lending business.
Senior executives at Bernstein warned her publishing such a negative report could end her nascent career. American General executives told her she was foolish and way off the consensus of her more experienced peers.
“I was sweating out of every pore in my body,” she later wrote of the experience on LinkedIn. “Even pores I didn’t know I had.”
Six weeks after “Whoa Nelly” published in 1994, American General revealed it was in even more dire straits than she had thought.
Krawcheck later became chief executive officer of Sanford C. Bernstein & Co. and helped it become one of the most esteemed research firms in the industry.
After her success at Bernstein, Sanford Weill, then-chief executive officer of Citigroup, recruited Krawcheck to lead Citigroup’s stock-research division after scandals of biased research surfaced.
It was clear from the beginning at Citigroup that Krawcheck was a “refreshing kind of leader,” says Susan Thomson Santoli, who has been a colleague and friend of Krawcheck since her start at Citigroup 16 years ago.
Santoli recalls how minutes into Krawcheck’s introductory conference call with the entire national brokerage team — a call in which thousands of people were probably listening, Santoli says — Krawcheck got a call from her child’s school.
“Sallie actually put this national conference call on hold” to speak with the school, Santoli says. In doing so, Krawcheck not only demonstrated her children came first for her, but also make it OK for every other parent in the company to do the same.
“She didn’t even realize what a big moment it was,” Santoli says.
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The making of a top female founder. It was this ability to see people and the problems they face in their entirety that would lead Krawcheck to the idea for Ellevest. But as with so many other aspects of her career, her initial idea was met with skepticism.
For decades, Wall Street focused on men because it believed women weren’t interested in investing. When Wall Street did consider women, it saw them as an underserved niche market to seduce with advertising. Wall Street pumped millions of dollars into what Krawcheck calls “target marketing” to lure women and their money into its fold.
But what did women find when they became enfolded? It was like bringing a woman into a men’s shoe store, Santoli says.
“You finally get them through the door with attractive marketing but then none of the products appeal to or fit them,” she says.
Enter Krawcheck’s idea for Ellevest. Rather than viewing women as a marketing problem, she saw Wall Street as a one-size-does-not-fit-all problem.
How Sallie Krawcheck invests. Krawcheck had realized through her own journey that women didn’t approach investing the way men did. Women don’t care about the competition in beating the market or picking winners; they care about meeting their financial goals, she says.
“I found when I was investing in individual securities, I’d buy pretty well but would always forget to sell,” she says. The trading game “wasn’t one I particularly loved playing.”
She already had her full-time job, her husband, her kids, her cats; there were other things she’d rather do in her spare time other than stock picking.
So she turned to the same advice Ellevest gives women investors today: Buy low-cost, diversified investment portfolios managed by a fiduciary, then reduce your risk as you get older.
“It frees up a lot more of my time and has been much more successful for me,” she says now of her streamlined investment strategy.
Women investors often falsely believe they should know everything there is to know before starting to invest. This can leave them uninvested for precious years as they struggle to educate themselves. Krawcheck says women overestimate the time it takes to invest and underestimate the amount of money they lose by not investing. For some, that loss could be $100 each day they remain uninvested, she says.
“If you had a hole in your pocketbook and $100 fell out every day, how long would it take you to fix it?” Krawcheck asks. “It wouldn’t take years, but the average person waits six to seven years before they begin investing for retirement.”
Bringing women into finance. The money industry remains one of the least diverse industries. Only two-in-ten managers are from minority racial groups and less than 30 percent of senior managers are women. Meanwhile women make up over two-thirds of support staff.
“Money in a capitalist society is power,” Krawcheck says. So it shouldn’t be surprising that “the most capitalist industry is the most manly of industries.”
While Krawcheck would “love to see women flood into the industry,” she won’t sugar coat reality: “If you’re going to be the first individual who isn’t a white male in a company that’s overwhelmingly run by white males, that’ll be a hard row to hoe.”
She tells women who aspire to the financial industry to know yourself and pick your spot with care.
[See: Avoid These 8 Rookie Investing Mistakes.]
Some areas are easier to enter than others, she says. For instance, she found being a research analyst was a terrific place to start her career. There was no ambiguity about the value she delivered: Either her research helped her clients or it didn’t.
“A lot of the gender issues fell away as a result,” she says. In fact, “being a woman may have helped more than hurt because I stood out.”
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Ellevest Co-founder Helps Women Invest originally appeared on usnews.com
