Ellevest’s focus on financial education to empower its clients has paid off, not only with its successful rounds of capital raising, but in its continuing growth in client base. Advisors may do well to consider how to use the same method of education to empower to gain more clients.
Two years ago, we covered the launch of two female-focused financial platforms: WorthFM and ElleVest. So how did they fare? The answer may surprise you. Both platforms hit hard on the robo-investing trend of 2017. That trend didn’t fare well for most other companies that rolled it out, like Betterment, the leader in robo-advising, who was hit with a $400,000 fine by FINRA based mostly on growing pains from not understanding how to properly maintain books and records. Another robo-advisor to fall was Learnvest, which was acquired by Northwestern Mutual and has since closed its operations.
And yet, when it comes to female investors, the difference came down to messaging. Here’s a review, WorthFM was started by Amanda Steinberg. She first launched a website aimed at educating women about personal finance and investing, DailyWorth. It became so successful that Steinberg was able to create a successful book deal from it with Worth It: Your Life, Your Money, Your Terms. At that timeDailyWorth’s online readership topped one million subscribers. WorthFM, launched in late 2016, had two million in initial equity seed funding. It describes itself as “a digital investing platform designed to engage and educate women as their investments grow.” WorthFM was designed to focus on volume; it uses technology to capture as much information about its investors as possible. WorthFM worked in partnership with Source Financial, an independent wealth management firm specializing in high net worth women.
ElleVest , headquartered in New York, predated WorthFM by just a few months, and boasts a roster of Wall Street elites with decades of experience. Its chair is Sallie Krawcheck, former head of Bank of America’s Merrill Lynch division. In 2017, ElleVest had nineteen million in equity funding. It’s website touts itself as “redefining investing for women.” Similar to WorthFM, ElleVest distinguishes itself from other investment platforms by arguing that it allows for greater individuality in investment planning. “We factor women’s risk preferences and longer lifespans into your plan.”
As they played out, WorthFM’s focus on high net worth women using a volume platform failed. It closed in September of 2017, about one year after launching. At its close, according to reports, it had $2.7 million in assets under management (AUM), 600 clients, and just over 1,800 discretionary accounts.
Ellevest, on the other hand, played to the volume in volume investing. They also crushed social media. Ellevest’s Instgram account has 123,000 followers (that’s double what Goldman Sachs has and 30% more than Bank of America). CEO Sallie Krawcheck has 24,500 followers on Instagram.
The results are clear. As of March 28, 2109, Ellevest proudly announced that it had completed another round of funding, and locking down $33 million in new funding and hadacquired “new investors including Valerie Jarrett (!) and Pivotal Ventures, the company founded by Melinda Gates (!!!), along with a brilliant group of returning investors.” Unlike WorthFM or the little known SheCapital, Ellevest began with moderate wealth women, and its website targeted financial education and budgeting to help those investors learn why they needed to invest. Only now, about two years after its launch, has ElleVest turned to high wealth women, with the launch of Ellevest Private Wealth Management. And Ellevest continues to connect its branding to the concept of financial feminism, even including news of other women-led companies in its press release about its funding. By the end of 2017, Ellevest’s assets under management topped $10 million. Two years later, on the heels of the $33 million raised in its March 2019 round of capital, it had $283 million in assets under management.
Krawcheck used her position as former wall street big bank exec turned entrepreneur to continue to educate women about how investing could empower women. This included Op-Eds about how having financial savvy and savings helped her survive sexual harassment in the work place as well as smart articles debunking stereotypes about women and spending, like her recent article in Fast Company. That article ends with a call to arms to women “Ladies, buy the f***ing latte, because I’m going to need you caffeinated when we do this thing.” Ellevest’s focus on financial education to empower its clients has paid off, not only with its successful rounds of capital raising, but in its continuing growth in client base. Advisors may do well to consider how to use the same method of education to empower to gain more clients.
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