To say that women are becoming more involved in the financial world is an understatement. While income inequality is still an issue, females are earning higher salaries and taking more agency with their finances than ever. So why aren’t they investing?
Research shows that men are five times more likely than women to prioritize investing. The reasons range from a lack of confidence to a distaste for the male-dominated world of financial planning, but one thing is certain - the needs of female investors aren’t being met.
That’s where Ellevest is looking to make a difference. Ellevest is a money management platform geared towards women. They claim to offer holistic help with money - from banking* to investing and more - and attempting to make the whole experience more comfortable for their clientele.
But is Ellevest filling a service gap or taking advantage of timid or inexperienced investors? Read on to find out what the experts think. And see how Ellevest compares to the cheapest robo-advisors, or even similiar money management platforms like MoneyLion.
- A money membership service geared towards women
- Flat-fee monthly pricing based on the service level you choose
- Multiple levels of service, including personal money coaching for purchase
$1 - $9 per month
Banking, Taxable, IRA
First Month Free
What Ellevest Does & How It's Different
Ellevest has transformed itself into a money management platform for women. It's designed to help with everything from banking to investing - with personalized guidance along the way.
With three membership plans, you can tailor your needs to where you're at in your life.
Ellevest is tailored to female financial needs. It recognizes the unique financial difficulties that women experience, including slower salary growth and increased longevity. They also claim to understand and address why women are more hesitant to invest their earnings - a main reason they fall behind in retirement planning.
In seeking to narrow that gender investment gap, Ellevest is dealing with the murky but important emotional aspect of investing. According to some experts, that could mean all the difference.
“The emotional side of investing is more influential than just about anything else,” said CFP Meg Bartelt of Flow Financial Planning. “So, anything that makes women more comfortable with investing and directs them to a tried-and-true investment strategy is a good thing.”
How It Works
Ellevest offers four core products rolled into its membership. They offer banking, investing, coaching and learning.
They call their banking* suite Spend and Save. Their banking is very similar to products like Aspiration. You get a debit card, you can round up** your purchases to save in a FDIC-insured*** savings account, and they offer normal banking features.
There are no overdraft fees, no minimum balance requirements, and unlimited domestic ATM reimbursement****.
When it comes to investing, they offer both a robo-advisor service (which was their original product when they launched), and personalized financial planning sessions for purchase at a discount with membership.
Their Start Investing robo-advisor service has no minimum balance to get started, and like other robo advisors, determines which investments to choose by asking the user questions about her goals, retirement timeline and financial history. It includes how much you’ll likely receive from social security and what kinds of accounts you currently have.
The only costs associated with investing are the monthly fees you pay - you don't pay any asset under management (AUM) fees. This is very similar to a Stash Invest model.
Finally, they do offer coaching, for both financial and career needs. You can pay for sessions with a financial planner to get questions answered, or a career coach to help you with things like negotiating a raise. Non-members can purchase sessions at full price, but members will get a 20-50% discount depending on your membership plan.
Ellevest also has a robust learning offering built into the membership. As a member you’ll be able to access live workshops with CFP’s and executive coaches, on demand email courses, content on their blog, and also get monthly customized progress reports.
With their switch to a money membership model, Ellevest has adjusted their pricing to simply be a monthly fee depending on the level of service you want.
They currently offer three membership plans:
Ellevest Essential - $1/mo
Ellevest Essential is their basic plan that gives you access to their banking* and investing products. You also get access to all the learning resources including free workshops. If you want to speak to a financial planner or career coach, you receive a 20% discount (sessions start a $125 without a discount).
Ellevest Plus - $5/mo
Ellevest Plus includes everything in essentials, but it also gives you access to personalized retirement planning for your IRA or 401k. They will also help you rollover your IRA or 401(k) to Ellevest for free. If you want access to a financial planner or career coach, you'll receive a 30% discount.
Ellevest Executive - $9/mo
Ellevest Executive is designed to provide a high level of access for people who want even more personalized help. You can plan for more personalized goals with investing and banking, and you get access to a free 1-on-1 review of your investments with a specialist (they clearly don't say financial planner, so we're not sure who this person would be). You also get 50% sessions with a financial planner or career coach.
In general, we don't like to see companies shift to this monthly-fee based approach. For lower account balances, it's actually more expensive as a percentage of your assets.
Before this transition to a membership model, Ellevest charged 0.25% AUM for digital and 0.50% for their Premium offering.
Today, if you have less than $4,800 in your account, even Ellevest Essential (at just $1 per month) is more expensive than what was previously charged. If you opt for Ellevest Plus at $5 per month, $60 per year doesn't sound like much, but once again, if you only have $5,000 in your account, you're paying 1.2% per year in fees - which is very high.
The alternatives here are cheaper for lower value accounts. For example, Betterment simply charges a flat 0.25% AUM. To be at the same pricing level on Ellevest Plus, you'd need to have an account with more than $24,000. At that point, Ellevest does become cheaper.
For Ellevest Executive, you'd need to have about $43,000 in your account before Ellevest becomes competitive strictly from a pricing perspective. Now, you may find value in their additional services, but they also still come at a price.
There was an impression initially that Ellevest was charging a pink tax to their female audience, and that was a big drawback. While they are more expensive for starting out investors, they do offer a myriad of services that may make it worthwhile.
However, given the changes in the robo-advisor and online investing marketplace, we don't think Ellevest has done enough to compete. We still believe that most people looking for a robo-advisor will find more value in Betterment. They also offer banking products that are on-par with Ellevest.
Furthermore, as one of the smallest players in the market, you have to always be concerned about whether the company will exist in 1-2 years. While your assets are always protected, if they don't succeed, it could be annoying to move your assets over to a new firm.
As of December 2019, they have $400 million assets under management (AUM). Compare that to Betterment, which has $16 billion AUM and Wealthfront, which has $20 billion AUM.
For those that want some automation, but want a little more control, M1 Finance recently announced FREE pricing - and that's hard to compete with. Plus, they also have banking products as well.
The bottom line is simple - you just have to ask yourself if the value you receive is worth the fees you pay each month.
If you're curious, check out Ellevest here.
What Experts Think
Ellevest remains divisive among financial planners, many of whom think there are better products already on the market.
“I think it's an interesting concept, but I'm just not convinced that investing for women is that different than it is for men,” said CFP Sophia Bera of Gen Y Planning. “I'm more excited by Betterment and the new Premium and Betterment Advisor Network pricing that they just rolled out.”
Other planners say talking to a real human being would be more comforting to women concerned about retirement.
“Women do have a different set of needs and concerns, from unequal pay to a much higher need for long-term care in retirement, but how does an asset allocation model solve that?” said CFP Mark Struthers of Sona Financial. “I don't think it can - only a real fiduciary planner can do that.”
Anyone interested in a financial planner can find one through the National Association of Personal Financial Advisors or the Certified Financial Planners organization.
What do you think? If you're a woman would you give Ellevest a try?
*Banking products and services are provided by Coastal Community Bank, Member FDIC, pursuant to license by Mastercard International.
**If you opt in to the Roundup Program for debit card purchases, each settled (i.e. fully completed) purchase transaction made with your Ellevest Debit Card will be rounded up to the nearest whole U.S. dollar. The Roundup amount will be transferred from your Spend account to your Save account. Foreign purchases are rounded up to the nearest whole dollar after the purchase is converted to U.S. dollars. ATM withdrawals and transactions in whole US dollars, e.g. $20.00 are excluded from the Roundup program. If, at the time of settlement of a purchase, your Ellevest Spend Account has insufficient available funds to cover the full amount of the Roundup transfer, the Roundup Transfer will not be made.
If a purchase is canceled or reversed for any reason (including disputes), the corresponding Roundup Transfer will not be reversed. You can opt out of the Roundup Program at any time.
***The Ellevest Spend and Save accounts are FDIC-insured up to $250,000 per depositor through Coastal Community Bank, Member FDIC.****Domestic ATM transaction fees will be reimbursed if a payroll direct deposit has been received within the prior 30 days of the ATM transaction settlement. International ATM withdrawal fee of $5 will apply.
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Ellevest is a new roboadvisor built specifically for women, but with on-par costs to other similar services, is it worth it?