Ellevest, a robo-advisor created by and for women, has made thousands of headlines since it launched in 2014. I was intrigued by the product and the mission.
I elaborate below, but in summary:
Ellevest offers a quality product with beautiful design and a lot of valuable content. At the end of the day, Ellevest is a robo-advisor whose core product is very similar to competitors like Betterment and Wealthfront.
- What is Ellevest?
- How Ellevest works
- Opening an Ellevest account
- Ellevest features and pricing
- Ellevest reviews: My Ellevest review
- Is Ellevest worth it?
What is Ellevest?
Ellevest is a robo-advisor that promises to address the unique challenges faced by women related to earning, saving, and investing.
Robo-advisors are a great tool for people who are not a financial professional or are suspicious of paying an advisor to manage your money (like me, and for good reason).
Instead of paying a human financial advisor 1 to 2 percent or more to manage your money, robo-advisors design investment strategies automatically by running various computer algorithms. They often match the performance of human advisors (though there is of course no guarantee) and typically charge far less, meaning you get to keep more of your money.
There has been a lot of incredible research to show that by taking human (and male!) bias out of the process and relying on machines, investment returns are better, and fees are systematically lower.
Plus, robo-advisors like Ellevest and Betterment tend to be very, very easy to use. The fact that most financial services platforms are so freaking confusing is one of the reasons that people — women especially — do not invest as much as they should.
Take it from me: I am a long-time business journalist and every time I go to move money around in my online brokerage, I find myself completely overwhelmed, confused and angry at the entire financial industry — which is nearly entirely designed and run by men.
In fact, 86 percent of financial advisors are men with an average age of older than 50 years, and scads of studies find that women are treated not-as-well as men when they seek out financial services.
Behind-the-scenes, analysts, portfolio managers, risk managers, etc., skew totally male. It is no wonder their products don’t appeal to or work for women.
Which brings me to the big question of this post: Is it possible to make a financial tool that actually serves women better than men?
Is this a bunch of fluffy marketing — or something more meaningful?
I admit that despite my love for Ellevest’s mission, I was skeptical of being pandered to. [Get a free financial assessment from Ellevest now.]
Who started Ellevest?
Ellevest was founded in 2014 by Sallie Krawcheck, a veteran of the financial industry who realized that financial products (like investment accounts) were not designed with women in mind. Before founding Ellevest, Krawcheck held a number of leadership positions at key financial institutions, including Citigroup and Bank of America.
How Ellevest works
What makes Ellevest so unique is the fact that it takes into account the unique challenges and realities of being a woman when it makes financial recommendations.
For example, it we know that women tend to earn less than men, even when they have the same education, same experience, and perform the same roles. This often translates into women earning a lower annual salary than their male counterparts, which translates into lower lifetime earnings over the long run.
With this in mind, their investment algorithm factors in important realities for women, such as pay gaps, career breaks, and longer average lifespans. Other robo-advisors don’t typically take these factors into account, and instead will typically give users the same advice whether they are men or women.
Additionally, Ellevest acknowledges that being a woman often involves leaving the workforce for a period of time to have children or raise a young family, which likewise can impact earnings and, subsequently, career advancement and retirement security. That’s why the service also offers retirement planning services specifically geared toward women’s unique situation, as well as career coaching services that can help you reach your career goals (money and career coaching sessions are offered to members at a 20-50% discount, depending on what membership plan you’re on).
Opening an Ellevest account
To open an Ellevest account you start by answering a few basic questions. These answers are fed into Ellevest’s algorithm in order to generate financial recommendations to help you reach your financial goals. In addition to your basic contact information, you’ll need to provide your:
- Zip code: This helps Ellevest understand your area’s cost of living, local home prices, etc.
- Age: This helps Ellevest understand where you are in your career and what your financial timeline looks like.
- Education level: This helps Ellevest gauge your earning ability.
- Current annual pay: This helps Ellevest understand your current earnings, which can impact your budget and investing strategy.
- Career information: Again, this helps Ellevest understand your earning ability, as well as whether or not there is room for salary growth over time.
- Marriage status: Single, divorced, widowed, etc. This helps Ellevest understand whether or not you are supporting yourself on one or two incomes.
- Number of children: This helps Ellevest understand whether or not you have childcare expenses and also whether or not you might need to save and invest for their education.
You’ll then identify your money goals, which include:
- Investing for the future
- Creating a budget
- Consolidating 401(k)s or IRAs
- Paying off debt
- Saving for emergencies
- Planning for retirement (available on the Plus and Executive membership plans)
You can select as many of these options as you want.
Interestingly, the app also asks you about your career focus and your career goals, which is not often included in other investment apps. You can select from options such as:
- Getting a raise
- Getting a promotion
- Feeling more confident in a negotiation
- Landing a new job
- Feeling like less of an imposter
- Making a career change
- Building your network
Ellevest will then ask you how much money you have in other accounts, such as savings accounts, retirement accounts, and other investment accounts. This helps the system have a clearer sense of your full financial picture before making any recommendations.
Finally, you will need to select a membership plan to fit your goals.
Once you’ve done this, you will need to finish setting up your profile by providing your contact information, linking your Ellevest account to an external bank (in order to fund your investments and pay your membership fees), and confirm your membership. This is very similar to how you would open any other investment account, and you’ll need the same information.
Ellevest features include:
- No minimum for investing
- Customer service by phone, text and email M-F
- Account types: Taxable brokerage, Roth and Traditional IRAs, checking and savings, joint accounts.
- Portfolios with ETFs and Mutual Funds are the only type of investments offered — this is a pro if you want to keep investing simple, a con if you want more choice and control over your portfolio.
When Ellevest first launched, the service originally charged users a percentage of their investment account. They have since made the switch to charging a flat monthly fee, which is comparable to many other robo-advisors.
Ellevest currently offers three membership plans: Essential, which costs $1 per month; Plus, which costs $5 per month; or Executive, which costs $9 per month.
Ellevest Essential costs $1 per month or $12 per year, which makes it on par with the costs for services like Acorns or Stash. The plan includes access to:
- A personalized investment portfolio that is tailored to your unique financial situation and goals, with no minimum deposit to start investing
- Access to online workshops, email courses, on-demand webinars, and video resources to help you learn about finances and career advancement
- Access to an FDIC-insured Ellevest Save account*
- Access to one-on-one coaching sessions with financial planners or career coaches, at a discount of 20%
Ellevest Plus costs $5 per month. If you pay for the entire year all at once, the cost is $54 dollars, meaning you save 10%.
Plus comes with everything that is included in Essential, plus an extra 10% off on coaching services (for a total discount of 30%). Additionally, Plus includes access to Ellevest’s retirement services, including a personalized investment plan and guidance on consolidating/moving retirement accounts as necessary.
Ellevest Executive costs $9 per month. If you pay for the entire year all at once, the cost is $97 dollars, meaning you save 10%.
Executive comes with everything that is included with both Essential and Plus, plus an additional 20% off of coaching services (for a total discount of 50%). You’ll also gain access to multi-goal investing, which allows you to open up to five separate investment accounts where you can begin saving and investing for a number of different goals. This might include saving a down payment for a home, saving for having a child, saving for your child’s college expenses, etc.
Private Wealth Management
If you have more than $1 million to invest, you can opt into Ellevest’s private wealth management option. If you go this route, you will receive a custom-made portfolio (instead of one generated by the company’s algorithm). You also have the option of choosing the platform’s Impact Portfolio which allows you to prioritize investing in various niche categories (such as in “women-owned businesses”) if you would like to do so.
Fees for private wealth management through Ellevest vary depending on the total size of your portfolio, starting at 0.90% for accounts with balances of up to $2 million and reducing to 0.25% for accounts with balances up to $100 million.
Investing with Ellevest
How do I invest with Ellevest?
When you sign up for your Ellevest account, the algorithm will design a portfolio that is specific to your financial situation and goals. Depending on your timeline and risk tolerance, this portfolio can be aggressive, moderate, or conservative.
Aggressive portfolios are typically better for those with a long investment timeline and who are comfortable with some volatility. They typically skew more heavily toward stocks and offer the most potential for growth over the long term. Conservative portfolios are typically better for those with shorter timelines or who are less comfortable with volatility. They most often skew more heavily toward bonds, which offer stability but lower returns over the long term. Moderate portfolios fall somewhere in the middle.
In either case, your portfolio will consist of a mix of different exchange-traded funds (ETFs) that provide instant diversification both across different asset classes (stocks, bonds, etc.) and within those asset classes.
In terms of actually investing in your portfolio, all you need to do is link your bank account. You can then set up auto-deposits which transfer money into your account on a recurring basis. The options currently available are:
- Twice a month
You can also make a one-time transfer at any time if you have extra money that you’d like to invest.
How do I withdraw money from Ellevest?
To withdraw money from your Ellevest account, all you need to do is log into your account and click “Move Money.” Then click on “One-time transfer” and enter how much money you need to withdraw. It will typically take about 7 days for you to receive your money after you request a withdrawal.
It is important to note that if you withdraw money from your investment account, this may cause you to realize capital gains, which can impact your taxes. Withdrawing from your Ellevest savings account should not impact your taxes, however. If you have a retirement account with Ellevest and withdraw from it, this can also trigger fees on top of taxes.
Is Ellevest FDIC-insured?
Any money that you hold in your Ellevest banking accounts are FDIC-insured up to $250,000 (the legal limit).**
Because investment accounts cannot be FDIC-insured, money held in your Ellevest investment accounts is not guaranteed. This means that you can lose money if the investments lose value.
That being said, your investment accounts are SIPC-insured up to $500,000. This means that if Ellevest were to ever go out of business, you don’t need to worry about losing your investments.
Is Ellevest legit?
Yes, Ellevest is very legit.
Ellevest has received $77.6 million in funding, from investors like Melinda Gates’ Pivotal Ventures and former Obama White House advisor Valerie Jarrett.
Personal finance site NerdWallet gives Ellevest 5 out of 5 stars and ranked them the best robo-advisor for IRA investing, Investopedia gave it 3.72 stars, and the firm has positive reviews from Yahoo! Finance, CNBC, TechCrunch, Bustle, U.S. News & World Report, Fast Company, and hundreds of others.
The broker-dealer for Ellevest Digital and Premium portfolios is Folio Investments, and the broker-dealer for Ellevest Private Wealth portfolios is Schwab.
Is Ellevest a fiduciary?
Yes, Ellevest is a fiduciary. That means that Ellevest’s fiduciary responsibility is to look out for clients’ best interests — not the company’s bottom line. There are federal laws that require financial fiduciaries to follow rules and create policies to protect clients’ money, and be transparent about how an investment advisory manage your investments and communicates with you. Ellevest adheres to those laws — and then some.
Ellevest reviews: My Ellevest review
The very first thing I noticed about Ellevest is that it looks good.
The site is clean, easy-to-use, and it is easy on the eyes.
Is this important — or is it just gussied up marketing to dumb women? Well, I don’t think women are dumb, and I will give Sallie the benefit of doubt and assume she doesn’t either.
The reality is this: Women and men respond to different marketing.
Women statistically have not responded well to gender-neutral marketing, which is one of the reasons why we don’t invest as much as we should, or we want to.
As I am fond of saying: Whatever works.
The first step to participating in Ellevest is a remarkable, totally free financial plan. It takes about 4 minutes to get a very realistic snapshot of where I am in my financial goals, and what it will take to get there.
Ellevest gives you six investment routes to choose from depending on your membership plan (you can choose them all with the executive plan, and then rank them based on what your priorities are).
These include money goals women actually have:
- build an emergency fund
- start a business
- own a home
- have a kid
From here, you can opt to start investing — opening a new account, connecting your bank account for a one-time or recurring transfers, and/or transfer funds from your existing traditional IRA or Roth IRA.
It takes a few minutes, and you are immediately sent to a page outlining your portfolio and what you can expect returns will look like.
If you don’t know what some of these terms mean, click on the dot to expand and learn.
Don’t really care/feel overwhelmed, and trust Ellevest will manage this for you? That is fine, too.
If you chose more than one goal-saving for an emergency fund, start a business, and buy a house — each of these portfolios will look different, since the risk, deposits and other factors required to meet those goals are different.
Ellevest reviews on BBB
Though Ellevest is not accredited with the BBB, the Bureau has given the company a score of B, which is respectable. Ellevest currently has 15 complaints on the BBB website (as of April 2021), and the company has been very responsive in answering these complaints. Most of the complaints center around confusion opening an account.
Ellevest reviews on Reddit
There are some interesting discussions and reviews about Ellevest on Reddit:
Is Ellevest worth it?
If you are looking for an easy-to-use robo-advisor that is uniquely focused on supporting women, and closing the gender investment gap, Ellevest is a solid choice. Its deep trove of financial content is high-quality. Check out Ellevest for free now >>
*Banking products and services are provided by Coastal Community Bank, Member FDIC, pursuant to license by Mastercard International.
**The Ellevest Save and Spend accounts are FDIC-insured up to $250,000 per depositor through Coastal Community Bank, Member FDIC.