Ellevest is a robo-advisory service designed with the goal of closing gender money gaps, but it welcomes clients of all gender identities and expressions. Most of its offerings were transformed into subscriptions in June 2020, though the highest level's fees are still based on a percentage of assets under management.
The driving force behind the firm, Sallie Krawcheck, felt that most portfolios are designed primarily for men, ignoring the unique needs of women. In an article announcing the launch of Ellevest, published back in 2015, Krawcheck said, “Women do not invest to the same extent that men do: a lower percent of us have started saving for retirement than men, we have saved less for retirement, and we park 68% of our money in cash.” She encourages women to ask for raises and to start investing as soon as practical in order to take advantage of compounding. Her vision with Ellevest was to change the underlying investment product to suit the needs of women rather than changing women to make them invest more like men.
You can choose your desired level of service for a monthly subscription. This review focuses on the $5 per month membership, Ellevest Premium, which includes retirement planning. The other two subscription possibilities are Ellevest Plus, at $1 per month, and Ellevest Executive, at $9 per month. Plus lets you manage a single portfolio that is a catch-all for all financial goals, while Executive allows you to manage up to six investing goals in a single account. There are no asset-based fees other than management fees for ETFs that are included in your portfolios.
Our review focuses on the company’s subscription-based digital offerings, although clients who qualify, based on the value of their accounts, are offered the opportunity to move into Private Wealth Management. That offering is available to customers with a minimum of $1 million and the fees are based on assets under management.
The platform includes a simple website and mobile app
Portfolios can be tweaked to make them more or less aggressive, depending on the goal
You can manage multiple goals in a single account with Premium and Executive memberships
Ellevest helps reduce overall taxation of your portfolio
Only individual accounts are enabled. No trusts or joint accounts available
The platform provides oddly aggressive recommendations for older customers
The overt attempt to appeal to women is clumsily done at points
Portfolios can’t be changed much beyond adjusting the risk level
Although females are the stated focus, dads, husbands, brothers, and other male friends are also welcome to open accounts. The platform uses gender-specific salary curves and longevity data to power the forecasts for goal planning. When planning for retirement, you’ll see longer life spans for women, encouraging females to have enough money saved up for those lengthy post-paid-employment years.
There is some positive reinforcement built into the steps you go through to set up an account. For example, every potential client is smart and successful by default.
Very early in the process, you're asked to select the subscription you want. This defines the kinds of accounts you can sign up for. The Essential plan, at $1 per month, lets you define a single goal while a Plus account, at $5 per month, includes retirement planning as a goal. You must select the Plus level if you're opening an IRA of any flavor. The Executive plan lets you choose up to six goals, including retirement, by clicking on the ones you would like to plan for and, when you’re done, prioritizing them. You're also asked to link a bank account well before you set up your goals, which implies a commitment well before most potential clients are done kicking the tires.
Once a bank account is linked, you’re asked about household income and then walked through a list of other accounts so that Ellevest can develop a complete picture of your assets. Entering estimates for account balances held in IRAs, 401(k)s, taxable investment accounts, checking, and savings helps the Ellevest algorithm to model your financial position against the goals you identify. Ellevest suggests totals for your goals, taking into consideration your current salary and other assets.
Once you’ve approved of the goals for your account, you’re shown a suggested portfolio’s asset allocation. You can see the specific ETFs and mutual funds suggested prior to funding the portfolio.
Ellevest could score higher in this category if the proposed portfolios were more customizable. Customization is limited to tweaking your risk level.
Building wealth is one of the primary goals that Ellevest promotes. All of Ellevest’s services focus on achieving investing goals rather than on beating a market index. You can invest in multiple goals at one time, such as retirement, a down payment on a house and starting your own business. Ellevest looks at your profile, goals and timeline, then recommends goal-specific portfolios, target amounts, assets on hand and other factors to generate a customized investment plan.
Once your various goals are defined, you can play with the assumptions to figure out how to achieve them all. You may see that you have to push one of your goals further out into the future to maximize the possibility of fulfilling another shorter-term goal. This overall big picture is particularly valuable for people with multiple goals and limited resources – which is most of us.
While going through the account setup process, I felt that the portfolio recommended for someone who is over age 60 with a 20-year period for building wealth was overly aggressive. This could be because the model puts a heavier weight on the longer average lifespan of women. However, a very similar portfolio was recommended for a potential customer in her 30s. While women arguably need to be encouraged to take on risks for portfolio growth, most portfolio management rules suggest that someone over 60 needs to be mostly focused on capital preservation. I will note that Ellevest says that the results I got are due to "user error," but I went through the process twice for a 60-year-old and got the same result.
There is no specific college planning capability, although the defined goals you can plan for include Kids, Home, Emergency Fund, Starting a Business, Big Splurge and Build Wealth.
Funding the portfolio is straightforward. You can set up automatic deposits into your Ellevest account on a twice-monthly, monthly or quarterly basis. You can also deposit a portion of a paycheck directly into your Ellevest account.
With Ellevest banking, launched in mid-2020, you’ll get a Spend account accessible from your Ellevest account, a custom Ellevest debit card, and a Save account. You can round up purchases made with the debit card to be deposited into your Save account. Spend and Save accounts are part of all three membership levels, though you are not required to use them.
Ellevest uses what it calls the Ellevest Tax Minimization Methodology, including tax-efficient muni bond funds in taxable portfolios and rebalancing to maximize taxable losses and minimize taxable gains whenever possible. Ellevest doesn’t advertise this as tax-loss harvesting, but the effect is the same. You don’t have to concern yourself with the tax management of the portfolio, just the funding.
If you're rolling over a 401(k) or 403(b) from an employer-sponsored account, the rollover landing page outlines what you should look at prior to beginning the process. Ellevest provides rollover support from its Concierge Team, walking you through the process and calling your provider together. This is a slight step back from their previous rollover feature, but the assistance offered could help you decide whether rolling the account over is in your best interest.
Like many robo-advisories, Ellevest creates set investment portfolios based on the criteria you put into the algorithm. These are primarily made up of ETFs from Vanguard, iShares, Schwab, and others, as well as mutual funds in certain cases. You can choose an impact portfolio, which is partially invested in impact-focused ETFs and mutual funds, such as the iShares MSCI USA ESG Select ETF and the Pax Ellevate Global Women’s Leadership Fund. The Pax Ellevate Global Women’s Leadership Fund, for example, is a way for women to invest in companies that invest in gender diversity and women’s leadership. The impact portfolio option is an area where Ellevest’s commitment to specifically helping women invest comes off as genuine and strikes the perfect note.
Ellevest takes a risk control focus on monitoring and rebalancing portfolios. Portfolios are rebalanced only when they have drifted away from their asset allocations beyond pre-specified thresholds that are specific to the goal and investment time horizon though they are monitored constantly.
Controlling your portfolio risk is more important to Ellevest’s rebalancing methodology than rigidly maintaining a specific asset allocation. If your portfolio is falling behind your stated goal, however, Ellevest prods you to make appropriate adjustments, such as pushing the goal date out further into the future or making larger and more frequent deposits.
Ellevest’s web experience is mobile-enabled, and there is a native iOS app. Android users will have to navigate to the Ellevest website on their mobile device. You can open and fund an account using the iOS app. The native mobile apps have been improved during 2020, coming close to the functionality of the website.
The website makes frequent use of drop-down menus in order to minimize data-entry errors. You can easily see an overview of your entire account or click on the goal labels in the top banner to visit each one individually.
Help is provided mostly by the FAQs on the website or by calling into customer support. The hours for phone calls are limited (9 a.m. to 6 p.m. Eastern Time), but the phone was answered quickly by a knowledgeable representative in our tests. Ellevest also provides support via text message and Facebook Messenger.
Private Wealth accounts have access to financial planners and career coaches. The subscription accounts can talk to financial planners and career coaches, but there are fees involved, which are discounted depending on your subscription level.
Education & Security
The website is easy to navigate and many questions are covered in the FAQs within the support section. There are some articles and videos on the website, plus an online magazine that is packed with female-centric investing and career tips and updated daily. The magazine includes one-minute videos with Ms. Krawcheck, and the content is posted to a variety of social media platforms.
The website and mobile app utilize high levels of security with two-factor authentication and encryption. When you invest through Ellevest, your assets are held by Folio, a broker-dealer/custodian that carries excess Securities Investors Protection Corporation (SIPC) insurance that covers up to $10 million per customer.
Commissions & Fees
Ellevest has switched to a monthly subscription, so there are no longer any asset-based fees. You'll pay $1, $5, or $9 per month depending on which goals you want to plan for, and what level of coaching or financial planning you'd like to access. All accounts can use the Spend and Save account features, which include FDIC-insured checking and savings accounts along with a debit card. All clients can set up sessions with career coaches and financial planners that start at $125; there are discounts offered depending on your subscription level.
At $1 per month ($12 per year) for an Ellevest Essential account, you can plan for general wealth in a taxable account. There's a 20% discount on coaching and financial planning sessions. Ellevest Plus accounts, at $5 per month ($60 per year), include the ability to plan for retirement with a Roth IRA or traditional IRA account. There's a 30% discount on coaching and financial planning sessions. Ellevest Executive accounts are $9 per month ($108 per year), which allows you to plan for up to six different financial goals as well as use a 50% discount on coaching and financial planning. These all compare very favorably to Schwab's subscription plan, which charges $30 per month.
Is Ellevest a Good Fit for You?
Although Ellevest welcomes all comers, it is designed with individual women in mind. This is refreshing most of the time and even poignant when it comes to the impact portfolio. I appreciate the focus on encouraging women to engage in their own financial futures but must admit that some of the language made me wince once or twice.
Ellevest is still relatively young as a platform, having launched in 2016. Empowering women to invest is an excellent goal, and the company’s approach will continue to evolve in a way that advances that goal while avoiding some of the pitfalls of a gendered approach. The offering strikes the right tone when it comes to the FAQs on the website and most of the overall user experience, though it asks for personal details uncomfortably early in the setup process.
If you are single and have multiple goals to manage, Ellevest could work well regardless of what gender you identify with. The process of rolling over a 401(k) or 403(b) is handled well, and the Ellevest platform is designed to save money on fees and taxes. It stacks up well within the robo-advisories on customer service, fees, portfolio management and so on. At times, the portfolio suggestions seemed aggressive, but the customization of the model for gender-specific salary curves and longevity data likely play a role in that. In fact, Ellevest may one day make the case that managing a portfolio for a single woman is a vastly different project compared to simply teaching the computer to apply modern portfolio theory given an amount and a deadline.
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