Today, on average, women’s annual earnings are almost $10,000 less than men’s.
While that may not seem consequential, when you consider that women tend to live six to eight years longer than men, the fact that women will usually have a smaller retirement account than their male counterparts becomes a very real problem indeed.
This means, as a woman, you’ll need to make some very smart investments.
If you’re looking to invest with a robo-advisor, you may want to consider using Ellevest, which caters specifically to women.
This article will cover everything you need to know about Ellevest for the female investor, from the investment philosophy behind this robo-advisor to the types of accounts it offers.
You’ll also find out about the three different types of services you can sign up for with Ellevest, depending on your financial needs.
Why Use a Robo-Advisor for Women?
Robo-advisors have become a really popular way to invest in recent times thanks to a combination of low fees and easy-to-use investment platforms.
However, many of them don’t take into account the wage disparity between men and women, which can result in a very different investment strategy.
Co-founded in 2014 by ex-Merrill Lynch Wealth Management CEO and Wall Street exec Sallie Krawcheck and tech entrepreneur Charlie Kroll, Ellevest is a robo-advisor with headquarters in New York.
What makes it stand out from other robo-advisors such as Betterment and Wealthfront is that Ellevest’s financial services have been designed by women, for women.
Ellevest’s investing platform takes into account the gender pay gap that results in women earning less money than men, career breaks that women tend to take to care for their families, and the statistically longer lifespan of women.
What this means is that women need their money to work harder to help fund what would potentially be a longer retirement.
As a fiduciary (an investment advisor registered with the U.S.
Securities and Exchange Commission), Ellevest is bound by law to act in your best interest.
But while Ellevest’s role is to be your financial advisor, they don’t actually buy and sell the investments in your investment portfolio.
This is done through Folio, a third-party broker-dealer.
Understanding Ellevest’s Investment Philosophy
To get started with Ellevest, you’ll give them your basic information, including where you live, how much you earn, and how many dependents you have.
Then, based on your financial goals and how long you’re planning to invest for, they’ll suggest a personalized investment portfolio.
If you’ve done any investing or research about investing, one of the most common pieces of financial advice out there to take your risk tolerance into account.
Surprisingly, Ellevest does not ask you about that.
Instead, they’ll recommend a risk level that they believe will help you to achieve your financial goals.
It’ll be based on your current and predicted needs and situation, including the impact of taxes, fees, and inflation.
They’ll also project your future earnings using a gender-specific salary curve.
Not only can you start investing with Ellevest with as little as you like (there’s no minimum investment amount), you can also withdraw your money at any time without incurring any penalties.
You can change the details within your Ellevest account, including your goal, the timeline to achieve it, and any recurring contributions.
Ellevest’s investment philosophy and framework were developed by their Chief Investment Officer, Sylvia Kwan, in collaboration with financial services firm, Morningstar, Inc.
With a focus on diversification to minimize risk, Ellevest offers 21 different asset classes across their goal-based investment portfolios.
With your money spread across different areas of the stock market, you won’t lose everything if one business sector you’ve invested in does poorly.
As part of the strategy to diversify, Ellevest’s investment options are composed mostly of Exchange Traded Funds (ETFs) that are primarily from Vanguard, to give you a low-cost way to achieve an appropriate mix of stocks, bonds, and alternatives that’ll help you reach your goal.
Ellevest Impact Portfolios
If you’re interested in making a difference with your investment, Ellevest Impact Portfolios enable you to invest in companies that advance women.
Through Ellevest Impact Portfolios, you’ll invest in companies with more women leaders and policies that advance women and who are working to meet higher standards for sustainability and ethical practices.
You’ll also invest in funds that provide loans to support women-owned businesses and companies that provide community services (such as child education, performing arts, and housing and care for seniors and individuals in need).
You’re welcome to switch from a normal portfolio to an impact portfolio (and back again) at any time, but be aware that switching portfolios may create capital gains, on which you may owe taxes.
Emergency Fund
It’s worth taking the time to mention the Ellevest Emergency Fund goal, one of the many financial goal options available to you.
The goal is achieved by attaining three months’ worth of take-home pay (your salary minus taxes) as soon as possible, but unlike most other types of investments, assets in the Emergency Fund goal are insured by the Federal Deposit Insurance Corporation.
At 0.01%, the interest rate on the funds in this goal is very low, but this is mostly because it’s invested in areas with the least risk — and therefore least gains.
Assets in the Emergency Fund goal do not incur any management fees so you don’t need to worry about being impacted by a market downturn or incurring costs on your safety net.
Ellevest Account Options
Here’s a list of accounts that are available with Ellevest:
- Taxable
- Roth IRA
- Traditional IRA
- Rollover IRA
- SEP IRA
While Ellevest doesn’t offer tax loss harvesting for its taxable accounts, it does offer free automatic rebalancing.
Ellevest Services and Fees
Like most other robo-advisors, Ellevest doesn’t require a minimum balance and charges fairly low fees when compared to traditional financial services, which will charge at least 1% in management fees, and anywhere between $9.95 to $50 in trading fees.
There are three services to choose from with Ellevest, each with different features, fees, and account balances.
Fees are prorated and charged monthly based on the market value of the average daily account balance of your invested accounts over the preceding month.
Depending on your type of investments, there are also fund fees, which can range from 0.05% to 0.19% per year.
There are also a number of other small charges that you may incur, including IRA fees, wire transfer fees, bounced check fees, and more.
Ellevest Digital
This is the most basic investment plan with no account minimum and an annual advisory fee of 0.25% of the assets you hold with them, except what’s in your Emergency Fund.
You’ll have access to the Ellevest Concierge Team, with services that include consolidating your IRAs and old 401(k)s and customizing your Ellevest goals and accounts.
Ellevest Premium
If you have a $50,000 minimum balance, you’re entitled to join the premium platform, where, on top of the Ellevest Concierge Team, you’ll also receive one-on-one guidance with a certified financial planner (CFP) and executive coach.
A CFP will offer you personalized guidance on areas such as planning a major purchase (such as a home), leveraging employee benefits, bonuses, and stock options, and also help you to navigate your finances through various life and career transitions.
And if you’re needing some help with your career, the executive coach will help you through salary negotiations, interviews, and even how to switch industries or break into a new field.
The Ellevest Premium service comes at an annual fee of 0.50% of the assets you hold with them, once again, excluding what’s in your Emergency Fund.
Ellevest Private Wealth Management
For those looking to invest $1 million or more, Ellevest offers a private wealth management with options to invest according to your values.
The pricing is based on services provided, which will be tailored to meet your financial goals.
Invest Confidently With Ellevest
Studies have shown that when it comes to investing, women do it better than men.
The problem, however, is that women don’t invest — or even think about investing — as much as men.
Women are more risk-averse, prefer the perceived safety of cash, and feel that the investment industry is tailored towards men.
If the reason why you haven’t invested is because of these same reasons, Ellevest may be the solution you’ve been looking for, with its focus on providing investment products and investment advice to women.
It takes only minutes for you to open an account with Ellevest, so why not consider doing that now to start your journey towards a retirement that’s more gender-neutral?
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