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Sallie Krawcheck’s women-focused investment startup expands to debit cards and a membership model



The last financial crisis helped transform former top Wall Street executive Sallie Krawcheck into an entrepreneur. The current one seems to be turning her back into a banker—though of a less traditional type.

Ellevest, the women-focused wealth-management startup that Krawcheck cofounded in 2014, is expanding its financial products and launching a new membership model that will provide customers with debit cards and bank accounts for a monthly fee starting at $1. The shift is part of a new effort by the New York company, which has historically competed against the robo-advisers and wealth managers used by higher-income investors, to attract a larger, and broader, customer base.

“We want to be absolutely as approachable as possible,” Krawcheck, Ellevest’s CEO, tells Fortune in an interview. “Our reason for being is to get more money in the hands of women—and part of that mission is, Who needs us? It’s people who in many cases aren’t ready to invest.”

The membership model, which Ellevest is announcing Wednesday morning, will mostly replace its current core business of charging a percentage of the investments it digitally manages for customers. Instead, for a flat fee of $1 per month, Ellevest will continue to manage customers’ money and also provide them with a debit card and a savings account, both run by a partner bank. For $5 per month, customers will also get access to specialized retirement-planning services, and for $9 per month, Ellevest will provide additional investing accounts with personalized advice on other financial goals, such as purchasing a home.

All three membership tiers will also give Ellevest customers access to webinars and other general financial advice, and discounts for one-on-one coaching sessions on specific financial problems. For example, a half-hour phone call to put together a personal budget would cost $125 before an Ellevest member’s 20% to 50% discount; another session to figure out a debt-paydown plan would be $150 before the discount.

Ellevest first started working on the launch of its debit card last year but accelerated its plans after the onset of the COVID-19 pandemic. Krawcheck says that while her company has seen an uptick in investments during the recent stock market volatility, the health crisis and the ensuing recession added new urgency to her strategy shift.

“Women have gone backwards during the pandemic,” says Krawcheck, who regularly draws attention to the gender money gap and especially the wealth gap. Even though they live longer on average, women invest only 32¢ for every dollar invested by men.

The statistics are much worse for women of color, especially the black and Latinx women whose jobs and health have been disproportionately affected by the pandemic and the current economic downturn. “The big drivers of wealth creation in this country have been investing and real estate,” Krawcheck says. “And those have been out of reach for so many people.”

Ellevest’s new fee-based membership model includes debit cards that don’t charge any additional fees, including for ATM withdrawals.
Courtesy Ellevest

A former chief financial officer at Citigroup and head of Merrill Lynch under Bank of America, Krawcheck was once widely considered a potential candidate to be the first female CEO of a big Wall Street bank. But the financial crisis, and the widespread restructuring it caused at top banks, upended her career as well as the industry’s tentative diversity efforts, leaving Wall Street “whiter, maler, and middle-age-er,” as Krawcheck puts it.

She left Bank of America in 2011 and in 2014 cofounded Ellevest, which launched in 2016. The company has since raised $79 million in venture backing from investors including Melinda Gates’ Pivotal Ventures, former Obama White House adviser Valerie Jarrett, former Google executive chairman Eric Schmidt, Mastercard, and PayPal.

While Ellevest does not disclose revenue, it claims more than 90,000 customers and more than $634 million in assets under management. The average customer is 34 years old and 94% identify as women, although Ellevest says it also welcomes “nonbinary people and male allies in all stages of their financial lives.”

Krawcheck also hopes that this pivot towards a membership-fee model will help her company reach profitability faster, although she declines to project when that will be. Other robo-adviser startups, including Betterment and Wealthfront, have also broadened their services to provide some traditional banking services and checking accounts; and with the membership model, Ellevest now seems to be thrusting itself into competition with other fintech investing startups like Stash and Acorns, which also offer some banking services in partnership with more traditional financial institutions, starting at $1 per month.

Despite her former career on Wall Street, Krawcheck says she has little interest in turning her company into a more traditional, full-service bank.

“I know a lot about banks. And being in the back office, with all of the regulatory and operational requirements of it, is not something we aspire to do,” she says. “That’s not a driver of us helping get a member more money, or helping get her along the path to financial stability.”

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One pandemic, two recoveries: New Yorkers are three times more likely to be jobless than Nebraskans



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It’s going to take a long time to get out of this economic mess, but we’re making progress: Since the end of April, the economy has added more than 10 million jobs and the unemployment rate has fallen from its peak of 14.7% to 8.4%.

But that national recovery is unequal. Employment in some states is back to pre-pandemic levels, while others are at mass joblessness levels surpassing the 2007-09 Great Recession.

When the pandemic hit, the jobless rate in Nebraska soared from 4% in March to 8.7% in April. But the state’s nearly fully reopened economy has helped push the jobless rate back to 4% as of August.

The picture in New York, the epicenter of the pandemic in the spring, is far less rosy. It saw its jobless rate climb from 4.1% in March to a staggering 15.3% by April. It has since improved to 12.5% in August—a figure that is still above the U.S. peak of 8.9% jobless rate during the Great Recession era.

How can a New Yorker be three times more likely to be jobless than a Nebraskan?

States like Nebraska that are more rural and haven’t been as hard hit by the pandemic have almost fully reopened. Earlier this month Nebraska allowed outdoor gatherings to reopen at 100%, including sports stadiums and fairgrounds. And places like bars and tattoo parlors were reopened weeks ago.

Northeast states like New Jersey, New York, and Connecticut were hit hard by the virus in the spring and are reopening businesses at much slower rates. Case in point: Indoor dinning in New York City doesn’t start back until September 30, and that’s only at 25% capacity. That cautious approach explains why New York’s jobless rate remains so high.

While New York leads the nation at 33,092 lives lost to the pandemic, its case load and deaths are plummeting, according to Johns Hopkins University data. Only .9% of COVID-19 tests in New York are coming back positive compared to over 50% at one point in April. Nebraska has far fewer COVID-19 deaths (452), however, its positive rate is 12.6%—which is above the 10% threshold that adds incoming travelers to New York’s 14-day quarantine.

And joblessness in New York is also elevated by its large leisure and hospitality concentration. That sector was smashed by the pandemic, and has yet to rebound. Leisure and hospitality jobs in New York City alone are still down 48%. And that’s also why joblessness is still so high in tourism heavy California (11.4%), Hawaii (12.5%), and Nevada (13.2%).

While Florida also has a massive tourism industry, its jobless rate is only 7.4% in August which can be chalked up to a more aggressive reopening plan than states like Nevada or New York.

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