In a season dominated by Taylor Swift, Beyoncé, and Barbie, investment world icon Sallie Krawcheck celebrates what she calls “the feminization of wealth.” Founder and CEO of women-led investment platform Ellevest, Krawcheck discusses Ellevest reaching $2 billion in assets under management and why The Great Wealth Transfer is primed to turn the economy on its head. A longtime student of the markets, Krawcheck also shares some valuable investing advice for young people everywhere.
This is an abridged transcript of an interview from Rapid Response, hosted by the former editor-in-chief of Fast Company Bob Safian. From the team behind the Masters of Scale podcast, Rapid Response features candid conversations with today’s top business leaders navigating real-time challenges. Subscribe to Rapid Response wherever you get your podcasts to ensure you never miss an episode.
Reaching the $2 billion milestone
Just a few weeks ago, Ellevest announced that it reached $2 billion in assets under management. Did it feel like you’d reached a pinnacle getting to that moment?
No, no, no, of course not. We did ring the opening bell of the New York Stock Exchange—the very traditional, very male, very haunted, New York Stock Exchange. And I do admit that I got a little emotional. We’re really proving something here. But it’s important that we are even more successful for our daughters. You can’t just say, “Oh, we got to $2 billion. We’re good.” Particularly in a day and age when women are being knocked back financially, women leaving C-suites at a record level, women’s bodily rights stripped from them—which is an economic and financial issue. There’s a lot of work to be done. And in a capitalist society, money is power. And so to change society, help women build wealth.
Ushering in ‘the feminization of wealth’
You’ve been writing about The Great Wealth Transfer and what you call “the feminization of wealth.” Can you explain that?
Tens of trillions of dollars are going to be in motion. Baby boomers accumulated and built historic amounts of wealth. Boomers are now beginning to die. And the boomers who die first are the men. Women live six to eight years longer than men. So this transition of money will go to the millennials and Gen Zs. It’s also going to women.
The feminization of wealth is a good thing because women tend to spend their money differently than men, tend to invest their money differently than men, donate their money differently, vote their money differently. . . . And it’s time to see what women could do with a little impact investing. We have hints. We see what Mackenzie Bezos is doing with her wealth. We saw Dr. Ruth Gottesman, who took the billion dollars her husband left her and gave it to the Albert Einstein Medical School so young people don’t have to pay tuition anymore. That’s the feminization of wealth, and it’s a good thing for all of us.
Women don’t always get their due when it comes to their economic impact. Last summer we saw this sort of wave of women-supported economic activity, right?
You’re welcome. We save the economy from recession, going to see Taylor Swift, Beyoncé, and Barbie.
Media messages around money and women tend to be shame inducing: “You’re overspending,” “You’re getting too many facials,” “You’re buying too many pumpkin spice lattes.” It’s a little, “It’s your own fault that you don’t have as much money.” What I loved about last summer is we’re like, “You know what? We’re going to dress up, we’re going to go out, we’re going to dance and change the U.S. economy as a result of it.”
I know you’re upset about recent reproductive rights being constrained for women. Is your position about that an economic position? Is it a personal position? How do you think about it?
Who cares about my personal position? I am all about what helps women and their families economically advance. And the numbers are irrefutable. If women have bodily autonomy, they can make the economic and financial choices that make the most sense for them, which by the way, can grow state economies as well. States that restricted women’s rights are not as economically strong as those that have not because if a woman is forced to have a child, that can often pull her out of the workforce. It gives her family a greater chance of being in poverty. You can’t help but look at the numbers around this.
Loneliness in leadership
You’ve written about loneliness that you feel sometimes working. Where does that come from? Is that just because you’re a leader at the top?
I can’t take the team on every part of the journey. There are parts of the journey I have to go on by myself. For example, when I did our last raise, it was brutal. The markets were good. Our numbers were terrific. It should have been easy. But we weren’t a crypto company and within FinTech, people wanted crypto. I had 300 meetings to get the thing raised. And I remember being in LA one Friday night, checking into a hotel, lying on the bed and tears running down my face. I can’t share that with anybody. You have to be candid with the group, but you can’t take them on every step of the road.
Investment wisdom and the risks that didn’t pay off
You’ve been a student of investment markets since those days in research at Sanford Bernstein. The markets have felt kind of nutty this year. Is there anything you’re noticing that might be good to know?
Same as it ever was. I have this memory of being a research analyst in 1994. And a legendary investor saying to me, “The markets seem the most confusing now than ever.” And every year since then, somebody says, “Boy, I just don’t understand the markets.” So this is no different.
The market is the aggregation of millions and millions of trades and opinions that are changing in any given hour. A volatile market just means that it hasn’t figured it out. You should be more concerned about a calm market because there’s so much that can happen. And that’s why you have to invest for the long term. If you’re in the equity markets for a trade, you’re going to lose. Investing for the long term means investing in innovation, you’re investing in the global economy—and then giving it time so it compounds. Those are fantastic bets. That’s the way to go, for sure.
It sounds so simple the way you say it. And yet so many people are focused on beating the market or winning against someone else.
Many men are focused on beating the market. Women want to be able to buy a house in five years, to be able to retire at the age of 73, and don’t want to have to watch one of the trading shows to figure out whether to be zigging or zagging.
The winning way to invest has been to put together a plan, an asset allocation based on your personal characteristics, based on what you want to achieve, put in a recurring deposit if you’re able to, and then let the market do its work. The biggest investing mistake men make is they over-trade. The biggest investing mistake women make is they don’t invest.
When you look at how far Ellevest has come and where you want to get to, what are the bets that you’re leaning into?
We’ve made some missteps along the way. We got into banking for six minutes and really didn’t listen to her. Her acute issue was building wealth in order to buy this or retire this way. She never told us, “Boy, do I need a better debit card.” Everybody was doing it though. So we brought out a debit card, and pretty quickly realized it wasn’t solving a problem. We had career coaches, which had a moment during the pandemic. And then the moment sort of passed. So we’ve really pulled into financial planning and building wealth. We’ll stick to our knitting.
I mean, it’s hard to focus when there are so many different places you can go and where you want to go.
And they all look great and the financial services, the TAMS are so huge. Like one of my early decks, I’m like, “If I get 1% market share, it’s a multi-gazillion dollar business, right?” Focus matters. Solving the right problem matters.
But, the other thing I’d say is investors matter. You’re raising a round and you’re getting a big check from an investor who tends to think that pink bubblegum is the way to go. If you have a hundred people offering you checks, you’re like, “We’re not about pink bubblegum.” But if you’ve got one investor, then pink bubblegum might be the direction you’re going, whether you want to or not, because you’ve got to fund the company. I have a terrific board. But I do have friends who have had these issues—the implications of women raising less money and having fewer options than men. I don’t think people tend to fully think through the different balance of power. If you’re Adam Neumann, you’re in a different position than if you’re a young gal scraping together the first million bucks.