Future of Investing

Ellevest is using its new funding round to add human advisors

  • Ellevest, the digital investment startup led by Sallie Krawcheck, has a fresh round of funding from Rethink Impact, PSP Growth and Salesforce Ventures
  • It isn't the first "robo-advisor" to introduce human advice, but the decision to do so came as a response to client requests, not a need to differentiate
Ellevest is using its new funding round to add human advisors

Ellevest, the digital investment startup aimed at women, is the latest “robo-advisor” to offer human advisors to its clients for a premium.

The company has just closed a $34.6 million funding round it plans to use to extend the momentum its business started to notice this spring, Krawcheck said in an interview, and grow its offering.

“The feedback we were getting from women was that they wanted us to do more for them,” Krawcheck said. “They looked for ‘real’ financial planners, people they can engage and interact with. That had not been part of our plan but we were hearing so much of it that we thought: when the client asks, and it makes sense, it’s a good thing to answer.”

The premium service, called Ellevest Ascent, will introduce clients to a financial planner to develop personalized action plans with them across their career and family goals, taxes, cash flow, debt, credit, investments, retirement and insurance. The company hasn’t developed the offering yet, though it has done research with some potential users so far, Krawcheck said. It will continue to test and refine the product during its rollout, as it did with its initial product.

Ellevest, which launched in May 2016, gives clients an interactive financial plan that takes things like the gender pay gap, earnings power over time, risk preferences, women’s longer life spans and caretaking responsibilities into consideration. Women generally earn less than men and their salaries peak earlier than men’s. Women may also have a different take on risk than men do.

The new feature is part of a trend that continues across an industry that at first touted robo-advisory as the future, and soon found that clients actually needed and wanted (and were willing to pay for) the human touch.

Last month, Betterment brought flesh-and-blood advisors to its offerings; for a 0.4 percent annual fee, clients with at least a $100,000 balance can have unlimited access to them. Wealthsimple also gives its Black-level clients (also with a $100,000 in balances) access to human advisors via phone, text or email. Ellevest hasn’t yet determined its fee structure for premium clients.

But there can be multiple firms that meet the different needs of the market, Krawcheck said.

“Everybody is our competitor. Inertia is our biggest competitor. The competition will always be there — that doesn’t mean there’s room for just one or two or three players. The market is enormous. It has trillions of dollars in investable assets. Women today have five or six trillion dollars in investable assets.”

 

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