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Industry luminaries Joe Mansueto, Mohamed El-Erian, Ajay Banga and Robert Druskin -- never mind co-founder Charlie Kroll -- make up a stellar roster of male executives backing this play for women's wealth
September 28, 2015 — 10:46 PM UTC by Brooke Southall
Brooke’s Note: Until now, Sallie Krawcheck has been the Joe Biden of robo-investing: in the startup race but officially out of it. See: At Morningstar, Sallie Krawcheck blasts her own (presumably ex-) financial advisor — and herself. Now come the hard questions for the Wall Street alumna like: How do you plan to reinvent women’s investing where all other efforts have failed? How do you come six years late to the robo sweepstakes and succeed when first-movers are struggling themselves? For now, Krawcheck has punted by tossing out a quippy quote in a press release: “It’s time to turn our attention to another gender gap: the investing gap.” Our distaste for this kind of fluff doesn’t mean we have punted on the idea that Ellevest might succeed. There are lots of smart people here. But I can’t help but notice how Ellevest’s destiny is tied to the money and acumen of men — not that there’s anything wrong with that, per se.
Sallie Krawcheck’s robo-venture launch aimed at women has a secret weapon — a dream team of men.
The former chief of the stockbrokerage businesses of Merrill Lynch and Smith Barney reported that she will attempt to launch Ellevest next year. A beta version of the site is already up, though it’s not clear whether the site is prepared to accept assets. A search of the SEC’s website didn’t reveal an ADV for “Ellevest.”
Ellevest will be based in New York City and focus on hunting and gathering the assets of women. But Krawcheck’s partner — Charlie Kroll, co-founder president and chief operating officer of Ellevest — and the investors she lists first on the press release are all men. Kroll founded account software firm Andera, which was sold to Bottomline Technologies Inc. for $44.5 million last year. There was $17 million invested in to it. See: The top 10 financial mistakes women make.
It is not clear whether Ellevest is private-labeling an existing robo-software or building it from scratch. A request for interviews with the principals was declined.
Also investing in the venture are: Mohamed El-Erian, chief economic adviser at Allianz and the former CEO of Newport Beach, Calif.-based PIMCO; Ajay Banga, president and CEO of Mastercard; Robert Druskin, executive chairman of the DTCC and a former chief operating officer of Citigroup; and Brian Finn, former chairman and CEO of Asset Management Finance Corp. and former president of Credit Suisse First Boston. See: After LinkedIn’s stock retreats, LinkedIn CEO hosts NYC event with Merrill’s Thiel, Allianz’s El-Erian, BNY’s Hassell and a robo-panel.
In addition, Joe Mansueto is putting his confidence and, by way of his company’s venture unit, the largest chunk of the $10 million round behind the venture. See: Morningstar takes a big stake in a startup gunning to be the Bloomberg for RIAs.
“Ellevest has an innovative and exciting vision to help women invest,” says the CEO of Morningstar Inc. in an email. “Sallie and Charlie have put together an outstanding team with the drive to successfully execute this vision, addressing the unique financial needs of women.” See: Why women just aren’t buying what financial advisors are selling.
An executive from another robo startup who asked not to be identified made this comment about Krawcheck’s entrance into the women’s investing field: “Even Learnvest scaled way back on their focus on women …. Best of luck to them and I genuinely mean that. Would be a great success story.” See: The real reasons Northwestern Mutual paid a reported $250 million for LearnVest.
Will Trout, robo-analyst for Celent LLC, says that the Learnvest observation is keen.
“It’s certainly something the 10 question onboarding process offered by Wealthfront et al doesn’t lead to,” he writes in an email. “LearnVest essentially operated as “online financial coach”, not an investments platform per se, a positioning one would think would lend itself to greater personalization and the ability to deliver female-friendly advice. The fact that they moved away from this approach speaks volumes.”
Networking = cheating?
Scroll down a bit farther in the Ellevest statement and you’ll find two women supporters: Andrea Jung, CEO of Grameen America and former CEO of Avon Products Inc. and Karen Finerman, co-founder of Metropolitan Capital Advisors Inc. and a panelist on CNBC’s Fast Money. (After original publication of this article, a PR spokeswoman sent an email pointing out these women were only low on the list because it was alphabetized. Fair enough.)
Krawcheck recently wrote on her blog about her philosophy for tapping a personal network.
“It helps to be someone who is ready to go 'all-in.’ That can mean drawing on what you’ve built, such as your network. I’ve met any number of people who’ve told me that they view calling on their networks for funding and introductions to potential customers as 'cheating.’ (Yes, I’ve really heard this… quite a bit, actually.) Well, strong networks have been shown to be one of the key differentiators of success for entrepreneurs.”
The Ellevest launch comes soon after the launch of Newton, Pa.-based SheCapital, founded by Tina Powell who serves as director of business management for Hackensack, N.J.-based RIA, Beacon Wealth Management LLC. It also follows, by a few years, the launch of Learnvest by Alexa Von Tobel, a robo-advisor effort aimed at women that was sold for $250 million to Northwestern Mutual. See: The real reasons Northwestern Mutual paid a reported $250 million for LearnVest.
Powell says she comes to the market with a different perspective than that of a Wall Street CEO.
“I didn’t grow up for 30 years with the wealth management spoon in my mouth,” she says. “In my blog I think I’m approachable and encouraging of dialogue.”
Powell was raised by a single mom from the age of five and experienced divorce herself. “I had to dig deep during that time,” she recalls. See: Why relying too heavily on a divorce attorney can be a bad financial planning move by clients.
Awake at night
Krawcheck declined comment for this article, but she has articulated the challenges she faces with Ellevest in recent weeks on her blog.
“I never lost sleep when I ran Merrill Lynch. I didn’t. I slept like a baby. I lose sleep over being an entrepreneur.” See: Why 4 a.m. is the best time to work.
Krawcheck loses sleep over what all entrepreneurs — male and female — fear: humiliation.
“What getting to success can mean is going all-in emotionally and risking failure and rejection,” she writes. “Because you will fail; it’s just a matter of what you fail at and how quickly you recover. And you will be rejected; it’s just a matter of getting past the rejections.” See: Forget their reputation; rich women are more fearless investors than supposed.
Krawcheck will face harsher scrutiny than most entrepreneurs due to her high profile and self-positioning as a world expert on wealth management. See: What to make of Sallie Krawcheck’s emergence as a Twitter-sphere celebrity.
“Are you after the idealized portrait of a startup?” she wrote in a column. “Or do you really want to build something and create something from nothing? Are you so passionate about the idea that you’re ready to go all-in? This takes being deeply honest with yourself about what motivates you and how you best operate.”
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Top Executive: Joe Mansueto
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