Katie Couric: You’ve said that it was a “mascara moment” that led you to create Ellevest? Tell us about that moment.
Sallie Krawcheck: It happened one day, when I was literally putting on my mascara. My mind was wandering, and I had the insight that the retirement savings shortfall (which some estimate to be $13 trillion!) is primarily a women’s problem. That’s because women live longer than men — in fact, 80% of us die single — and we retire with 2/3 the money of men. I then began to think about how we can close this gap: one way is by helping women invest more. Women today keep the majority of their money in cash (while men invest the majority of their money); not earning the returns that have historically been available from investing can cost women hundreds of thousands of dollars — for some women $1 million + — over their lives. It’s further clear that the existing investing offerings aren’t working well for women; otherwise we would all be more invested. That’s when I decided to found Ellevest, an investing firm specifically created for women. And, no, not as a marketing angle, but through recognizing that women have different financial realities than men and are motivated to invest in different ways.
I couldn’t believe this statistic — 61% of women would rather talk about their own death than about money. How do you explain this, Sallie? Why is money talk so taboo?
Women have been socialized since childhood that “money is for men” and that talking about money is uncouth, unladylike, unattractive. In fact, our parents talk to our brothers about making money and to us about being careful with money and with saving money. In the workplace, women have further received the messages that asking for more money can be met with a negative response. And we further receive messages in popular culture that we are no good at managing money: women’s magazines have described financial planning as “hard” and “difficult.” Not so for men. So no wonder we won’t want to talk about money! We’ve essentially been told not to our whole lives!
In the past, some have also pointed to a female “risk aversion” to the market as an explanation for the investing gender gap. What’s your take?
I cannot tell you how prevalent this point of view is. But it’s wrong…AND it’s “blame the women.” If they aren’t investing, this implies, it’s their fault and they need to change. It in no way questions that perhaps the industry needs to adjust its offerings.
Our research — and our business — at Ellevest demonstrate that women are no more “risk averse” than men are. Instead we are “risk aware”…..which simply means that we want to understand risk before we take it on. Once we do understand it (in plain English, such as how much money we could potentially lose), then we take on as much — and at Ellevest, sometimes even more risk — than men do.
You’ve said that the finance industry has essentially built a “pink wall” that keeps women out, even unknowingly. What can we do to begin tearing it down?
Just look at the numbers: 90% of Wall Street traders are men, 86% of Financial Advisors are men, 90% of mutual fund managers are men, 95% of hedge fund managers are men, and 95% of venture capital partners are men. This is despite the fact that the research tells us that women are just as good — in some cases, better — than men at these jobs.
The sad result is that the industry does a better job for men than for women: men are more likely to invest than women, and men’s businesses are more likely to receive venture capital funding than women’s.
This is why we founded Ellevest, to tear down this pink wall and give women (and “woke” men) an alternative to the status quo. A big motivator for me was when a friend of mine said she no longer wanted to have her money managed by an industry that has excluded people like her — and in which she would not want her daughter to work.
A lot of these issues are very personal to you as a woman working in finance. You were actually told to “sit down and shut up” while working at Citi. Are you hopeful that the days of that kind of treatment for women are waning?
I am hopeful. But I am not confident. #MeToo has revealed that we have not made as much progress as it felt like we had.
What’s your advice for women who are making their way in traditionally male fields like finance?
When I’ve been asked if being a woman in finance helped or hurt me, my answer is “Yes.” While we tend to focus on the negatives of being in the minority in an industry, there is also an opportunity to stand out. You’re harder to forget, good or bad. (That being said, lack of diversity in any industry is a negative for everyone, even those in the majority, as it tends to lead to blindspots and thus to inferior business results).
So let’s talk about addressing the issue early on. How can we talk to our sons and daughters differently about money?
We just need to speak to them the same: talk to both about saving AND investing. And, for good measure, have them see both parents, regardless of their gender, engaged in investing.
What concrete steps need to happen that would make you feel confident that women are on their way to achieving financial equality with men?
I think an important step forward — and perhaps even a necessary step forward — is for the US to enact a mandated, paid maternity leave as a country. We are the only developed country without one, and it knocks women out of the workforce; this is despite the fact that a paid maternity leave has been shown to pay for itself within a year, as companies then do not have to replace women who don’t return to work. It’s heartbreaking to me how little we talk about this as being the substantial hurdle that it is for women.
What’s the best piece of investment advice you’ve ever received?
Invest for the long-term. That means not to watch your investment portfolio day-in and day-out, and particularly not during periods of market volatility. Find an investment provider you trust and invest a bit out of every paycheck.
And, finally, what’s the best piece of life advice you’ve ever received?
Every day above ground is a gift.