Sallie Krawcheck is on a mission. A few years ago, you would have found her on the cover of Fortune Magazine. As CEO of Merrill Lynch Wealth Management, she rose up the ranks to become one of Wall Street's most powerful women. Today, she’s making her greatest impact yet. Ellevest, a digital investment platform for women, is revolutionising what it means to invest.
If you’ve ever been confused by investing (with that much jargon, who isn’t?) or thought you don't have enough money to even start investing, this interview is for you. It's time to get serious about your money, because nothing is more exciting than financial freedom.
As someone who has been on the top of Forbes and Fortune lists and had a career that epitomises success, I’m curious about how your definition of success has changed over the years?
At this stage of my life, success to me is all about having an impact and building a great company. Your readers probably haven’t heard the term “gender investing gap” and aren’t aware of the fact it costs them typically hundreds of thousands of dollars over the lives. My goal right now is to, first and foremost, make women aware of it. Secondly, I hope to really inspire women to begin investing. And if they do close the “gender investing gap”, they can live lives that are very different from the ones they would otherwise live.
Many women I know have an interest in investing but, because they’re from working class backgrounds or saw their parents lose money in the financial crash, they feel scared to invest. It can be viewed as a very uncertain thing. What would you say to anyone who has those concerns?
Let me tell you, we hear this all the time… “I saw my parents lose money” or “my parents never invested, so I don’t know how to do it”, or “aren’t I supposed to have a guy who does it for me? Who’s the guy? How do I find the guy?” Here’s what I would say: investing steadily has historically been lower risk and higher return than most women think. The key here is investing steadily.
Historically, if you were to invest the day before the big crash of 2007, of course you did badly. If, on the other hand, you invested the day before and then you invested the same amount, let’s say some percentage of your pay check, the week after, and the week after that, and the week after that… what that means is that you have not made a market-timing bet. One week you may have bought high (darn it!), but the next week you may have bought super low. The recovery from markets like that, if you invest in that way, has historically not taken decades, but years. My advice is to make it a habit and invest steadily and, as a result, you will get market-life return.
It might not sound interesting, but the equity markets have returned 10% over long periods of time which is a LOT better than bank accounts, where your money is yielding close to nothing. This is a big deal.
You’ve had an incredible career. What’s some of the best career advice you’ve ever been given?
Investing is the best career advice women are not getting. There’s so much talk about how to get a raise and yes, that really matters. There’s so much talk about starting your own company which, again, matters. But nobody’s saying, "you should invest". Think about it... if you have invested steadily over time and earned returns, do you feel better leaving your bad relationship? Do you feel better starting your own business? Do you feel better telling your boss to take this job and shove it? The answer is yes, yes, yes! We women are not saying to each other, “are you investing?” When was the last time anybody asked you that? They didn’t! But it’s life-changing.
The other advice I have is that we women tend to always just ask for a raise. And if you don’t get the raise, you’ve failed. I recommend asking for other things, too. Particularly if you don’t get the raise. Ask for your company to pay for you to go to coding class. Ask to work on the new marketing project. Ask to be transferred to France for a project. Ask for. Ask for. Ask for.
There are lots of things that provide value that you can ask for that aren’t always just “please give me another $5,000”.
Yes! I love how you called them “non-money” perks in the Gender Gaps guidebook. I thought that was really clever.
Absolutely! Non-money perks can lead to money, and sometimes they can lead to even more money.
The perks you ask for in your current job, whether it’s a coding class or involvement in a bigger project, can lead to more money elsewhere when you go for your next job. Many women tend to think too small.
That’s right. Typically, your boss is going to want to say yes to you on something, so by the time you get to a 5th ask, you can usually get a yes. The worst that can happen is that they say no and so what? Who cares? They’re not going to fire you for it!
What tips do you have for women who are navigating male-dominated environments? How can women use their femininity to their advantage in the workplace?
People always ask me, because of the career I’ve had, “did being a woman in business help you or hurt you?” and my answer is yes it did! Of course, I had bosses who had gender biases that hurt me. I absolutely did. But I also recognise that I attracted attention because I was one of the few females and I was very good at my job. That attention was good attention, so I think there were real benefits. I always like to joke that I don't believe I would have been on the cover of Fortune Magazine, back in 2002, if I was a middle-aged bald white guy. I just don’t. But I also wouldn’t have been on the cover if I hadn’t been great at my job, and hadn’t taken a business bet that paid off. It wasn’t like, “hey, it’s a female, let’s put her on the cover!”
As long as you’re great at what you do, being a female can sometimes hurt you, but just as often it can help you.
What have been your biggest lessons from starting Ellevest so far? I saw you were quoted in Fortune magazine as saying that it was “easier to run a bank like Merrill Lynch than run a business”.
It’s hard. It’s hard to build something out of dirt. It’s hard every day. Everyone talks about how hard it is to get funded, and it is, but they don’t talk about the thousands of other things that are hard: coming up with the idea, finding the right co-founder, finding the right technical people, finding the right design people, finding the right product people…
Ellevest's design and tone of voice is really on point. I think you’ve completely nailed it.
I was fortunate that our first hires were spot on. We have a Product Manager, Lead Designer and Chief Investment Officer who are all outstanding. But I assure you there have been other areas where we have had some hiccups. It comes down to the fact that people matter, no matter what business you’re in.
What was the catalyst for starting Ellevest? What was the trigger in your life that made you think “I need to do something different. I need to make this impact”?
I had to. I just had to. It struck me a few years ago that the retirement savings crisis is actually a women’s crisis. We live longer than men do, but we retire with less money than men do by good measure. I started from more of a policy perspective, thinking “how do we solve this?”. As I’m an analyst by training, I began to quantify the cost of the payment gap and stumbled across this idea of the gender investment gap. I quickly realised it was a big deal. The industry has tried to solve it for decades now, but they’ve come at it in the wrong way. They’ve approached it as a marketing problem, rather than a product problem. Once I had the idea, I went and told a bunch of people about it, including big company CEOs. I would finish a big pitch, in which I would tell them that 90% of women manage their money on their own at some point in their lives, and the response was, “but don’t their husbands manage their money for them?”. That literally happened.
Finally, I realised that if I’m not going to do this, nobody’s going to do this. I had such a wonderful career, it wouldn’t be fair for me to leave this earth and not try to make a difference. To not use the experience I have to try to fix this? It would be selfish of me, frankly.
That’s why I came to the conclusion that I just had to do it.
For my readers who may be interested in investing, but think “ok, I don’t actually have that much money to invest, or I don’t earn enough to invest”, what would you say to them?
I’m so glad you asked. That’s why we have no minimum on Ellevest, because it’s important to me that we make investing accessible to everyone. The way to do it, which I’m so happy about, is that 3/4 of our clients have recurring deposits.
If it’s just 1% of your salary, start there. In a few weeks, maybe take it up to 2%. In a month, take it up to 5%. Set yourself a goal of getting your 10%. Ellevest is goals-based, whether it’s to buy a house, start a business or retire well. But even if you don’t have a specific goal yet, choose a goal that will work to build you wealth over time. Just get started.
We did hundreds of hours of research with women, and what we learnt was that men gloss over jargon and read past it and through it, and women won’t. We try and get it defined for us. So we aimed to have content that was as plain English as possible and addressed issues that matter for women. Not in a “let’s all have enough money to buy Manolo Blanicks!” way, but more "not investing is costing you a fortune. Here’s how much it actually is.”
Here’s an astounding figure. If you’re making $85,000 a year and you put aside 20% in cash instead of investing and you wait a decade to invest, which is what most women do, that will cost you on average, historically, $100 a day.
That honestly makes me feel quite sick!
You and I both know that if $100 fell out of your pocket one day, you might think “ok, that was weird!” The second day, you’d think “I need to fix my pocket!”. You wouldn’t even let a week go by. There’s no way you’d lose $700! You would fix it. And yet, because the numbers aren’t instantly in front of our eyes, we don’t recognise how big this cost has historically been for women. It’s huge.
My view is we just aren’t equal with men until we’re financially equal with men. Investing is the means to controlling our lives to a greater degree.
Inspired to get started? Visit Ellevest and download the (amazing!) Gender Gaps guide to dominating your financial future. It's totally free and one of the best things I've read in a long time.